Indian govt lifts minimum export price cap on onion, basmati rice

The Indian government on Friday scrapped the minimum export prices (MEPs) on onion and basmati it had imposed last year to cool domestic food inflation, according to separate notifications, in steps that will cheer the country's farmers and traders.

Earnings from the export of basmati, a premium produce, had fallen sharply due to trade restrictions, while onion growers and traders had demanded the removal of export barriers.
MEP is a set minimum price below which a product cannot be sold to foreign buyers. It's a measure designed to discourage exports and increase local supplies. The restrictions were clamped amid a surge in food prices last year.

The government removed the MEP on onion exports to curb a rally in domestic prices but chose to retain the applicable duty, a move that will cheer growers.

In August last year, the government imposed an MEP of $1200 per tonne of basmati exports when consumer cereal prices rose nearly 20%.

In October last year, the government reduced the MEP on basmati to $950 per tonne, which now stands scrapped.