Shipping 'grapes', selling onions: How smugglers defy export ban

Pune: Indian onions are fetching as much as ₹140 a kilogram in Malaysia, Sri Lanka and the UAE, more than ten times the wholesale price in Nashik, tempting smugglers to defy a ban on the export of the bulb vegetable, traders said.These "rogue exporters", traders said, are shipping out onions by mis-declaring them as potatoes, shallots or even labelling them as grapes.

India banned the export of onions effective December 8 to make the essential kitchen staple cheaper for domestic consumers. This has led to a crash in the price from more than ₹40 a kg to around ₹13 currently in the wholesale market of Nashik, India's main onion-growing region.

The ban on exports by the second largest onion producer, which used to ship 40,000-50,000 tonnes of the commodity every week, caused a spike in international prices.


The huge difference in the prices in the local and export markets enticed smugglers, trade sources said. They estimate the weekly illegal export of onions to be 700-800 tonnes. The smugglers, they said, are making a profit of around ₹30 lakh per container of 28-30 tonnes. "The buyers at the destination countries are telling us that they are getting a regular supply of Indian onions ," Horticulture Produce Exporters' Association president Ajit Shah said.

'New Method May Become Norm in Future'
After the association flagged the issue in January, the finance ministry asked the customs department to take legal action against exporters shipping onions illegally.

"It has been brought to the notice of the board that some of the exporters are exporting regular onion by mis-declaring it as Bangalore rose onion /shallots/Krishnapuram red onion/potato despite the ban imposed on the export of the onions," the Central Board of Indirect Taxes & Customs under the ministry said in a January 20 circular to all chief commissioners of the customs department.

According to top onion exporters of the country, this is the first time that smugglers were using this method of mis-declaring onions as another commodity to bypass the export ban order. The main destinations for the shipments are Sri Lanka and Malaysia, they said.

"We are afraid that this new method (for smuggling) can become the norm in future. Even when the government imposes export duty, as it had a few months ago, these new tactics can be used for illegal exports," said Shah.

The onion industry has also been raising the issue of India losing its market share in international trade due to uncertainty over the export policy.

Meanwhile, onion farmers have been agitating for two months demanding lifting of the export ban. "The smuggling of onions has proved that the export ban has helped only a handful of traders to make money while onion farmers continue to bear losses due to subdued prices," said Bharat Dighole, president of the Maharashtra Onion Growers' Association.

Last week, a team of central government officials visited the onion growing region of Maharashtra. The team is expected to make a recommendation to the government about the export ban order, which expires on March 31.