August 22, 2023 | Investopaper
The onion prices in Nepal has witnessed a rapid escalation following India’s recent imposition of a 40 percent tax on onion exports, aimed at stabilizing its own domestic market rates. The sudden surge in the cost of onions, a staple commodity, has predominantly been attributed to this tax move by India.
The effects were starkly visible as the price of onions skyrocketed by NPR 17 per kilogram (28 percent) within a single day at the Kalimati wholesale market on Monday. From Sunday’s rate of NPR 61 per kg, the price surged to NPR 78 per kg. However, the retail market experienced even steeper pricing, with onions selling above NPR 90 per kilogram on Monday.
Reflecting on the import figures, Nepal imported roughly 180,200 tonnes of onions worth NPR 6.75 billion in the fiscal year 2022/23, yielding government revenue of NPR 778 million from these imports. Comparable figures from the preceding fiscal years stood at NPR 6.17 billion in 2021/22 and NPR 5.95 billion in 2020/21.
While a fraction of onions trickles in from China, the majority are imported from India, tethering local prices to fluctuations in the Indian market. With annual demand exceeding 400,000 tonnes, domestic production falls between 250,000 to 300,000 tonnes, necessitating significant imports.