Govt prohibits onion exports, lifts ban on wheat, rice

In a concerted bid to fight the near double digit inflation, the government on Thursday banned onion exports and continued crude and refined cooking oil imports at zero and 7.5 per cent duty respectively for another one year for sale through PDS (public distribution system) at Rs 15 a kg subsidy.

The empowered Group of Ministers (eGoM) headed by Finance Minister Pranab Mukherjee also lifted the 4-year old ban on exports of wheat and rice, noting that their prices are stable and the government has no storage capacity to handle the record wheat production of 85.93 million tonnes and 95.32 million tonnes rice in the 2010-11 crop year.

There will, however, be no exports of the two commodities from the government stocks acquired through procurement for supply through PDS, Food Minister K V Thomas told reporters. "No exports from our FCI (Food Corporation of India) godowns," he said.

He also clarified that the ban on onion export is temporary and will be reviewed every two weeks until its prices decline below Rs 15

per kg. The onion prices have shot up to Rs 25 to 40 in the retail markets, necessitating the ban, he said.

"Wheat and non-basmati rice exports have been put under the Open General License (OGL)," Commerce and Industry Minister Anand Sharma told reporters in New Delhi.

However, the foodgrains exports would be subject to a quantitative restrictions of two million tonnes each.

"We will stop export of wheat and non-basmati rice once shipments reaches two million tonnes each," Food Minister K V Thomas said.

Wheat and rice exports were banned in 2007 when food grain production fell sharply and the government wanted to augment its buffer stocks for any exigencies.

The situation has, however, changed now when the government has no capacity to stock the food grains and they are being stored in open causing damage.

As of August 1, FCI held 61.1 million tonnes of wheat and rice, much higher than the buffer stock norms prescribed by the government.