July 21, 2024, Sunday
Nepal 1:37:26 pm

Imposition of tax in India already hits Nepal’s onion market

The Nepal Weekly
August 22, 2023

With India imposing a 40 percent export duty on onions with immediate effect to discourage its export, onion prices have already started increasing in Nepalese market.

A huge price rise or even a shortage of kitchen essentials could dampen the mood of Nepal’s upcoming festival celebrations, according to observers. According to news reports, India has imposed a 40 percent export duty on onions.

Indian news agencies reported that the duty imposed by the world’s biggest exporter of onions will help New Delhi contain local prices ahead of key state elections later this year but will force Asian buyers to shell out more, as other regional exporters have limited supplies.

Average wholesale onion price in key markets of India has jumped nearly 20 percent from July to August, to $28.87 per 100 kg on concerns that erratic rainfall would lead to lower yields. The onion, which cost Rs. 60- 70 last week has now reached over Rs. 90 and it is expected to cross Rs. 100 soon.

Onion prices doubled few months ago when Nepal imposed a 13 percent value-added tax (VAT) on it. The VAT was imposed on imported foods and vegetables for the first time as the tax-hungry government struggled to meet their annual revenue collection target.

Onions, which were trading at Rs16 per kg at the wholesale market before the budget announcement on May 29 doubled to Rs32 per kg after the budget.

On Sunday, the average wholesale price of onion was priced at Rs 70 per kg in Kalimati Market, Nepal’s largest vegetables and fruits marketplace.

China is an alternative source for Nepal’s onion needs but China’s big sized onions are mostly used for salad purposes, mainly in hotels and restaurants. In 2019, the price of onion hit a new high of Rs250 per kg in Kathmandu after India slapped a ban on onion export to maintain domestic availability.