Indian Onion Export Market – The Bijak Perspective

Export of onions In India Export of onions In India

Indian onions are in huge demand, both in India and abroad thanks to their strong pungent flavour. In fact, more than 15 lakh metric tonnes of onions worth ₹2,826.50 crores were exported during the year 2020-21. In our last article, we got an in-depth view of the onion agri value chain in India from Navdeep Vyas, AVP of Operations at Bijak. Today, he takes us through the nitty-gritties of the Indian onion export business.

What makes an export-grade onion?

Indian onions are popular because of their strong pungent flavour. Indian onions are usually made up of kharif and rabi onions. Kharif onions are planted between July to August and harvested between October to December. Rabi onions on the other hand are planted between December to January and harvested from March to April, the summer months. About 60% of onion production happens during rabi season and these onions are stored to meet domestic as well as export demand till the arrival of the kharif onion crop. As a general rule, rabi onions store well and are preferred for exports. This is because rabi onions tend to be dry and therefore can withstand transportation via rail, road or freight shipping.

“Export quality onions are pretty different from what you may get at the local super market,” says Navdeep. “For example, you may have noticed small bruises on your locally purchased onions. But export quality onions will not have these. They are usually graded on size. They can’t be less than 65 mm in diameter. This is because bigger onions factor in volume efficiency and shrinkage. Volume efficiency stands for the number of onions that can be packed into a container, the average container being 20 feet long and with a capacity to hold 20 tons. When it comes to shrinkage, all onions shrink at the time of transportation. Therefore the bigger the onion, the better its chances of arriving in a good state.”

Freight shipping of onions
Onions are shipped after being packed into containers

Some of the most common varieties that are exported are White Onion, Red Onion, Bangalore Rose, Podisu and Krishnapuram Rose. Certain varieties of yellow onion such as Suprex, Granex 55, Granex 429, Arad- H, and Tana F1 are exported to European countries.

“Export quality onions are pretty different from what you may get at the local super market. For example, you may have noticed small bruises on your locally purchased onions. But export quality onions will not have these.”

What are the main elements of the onion export process?

The usual onion export process is as follows:

Indian onion export process Infographic
Indian onion export process – Infographic
Onions packed for shipping
Onions packed for shipping

Who imports Indian onions?

India exports both fresh and dehydrated onions to other countries. However, fresh onions constitute around 70% of the total onions exported from the country. “Bangladesh is our biggest customer, consuming 30-35% of the total Indian onions exports.” says Navdeep. “This is closely followed by Malaysia which imports Indian onions worth 400 to 500 crores every year. UAE comes in third with an annual import of onions worth 300 crores. The other major export destinations are Bangladesh, Malaysia, Sri Lanka, UAE, Indonesia, Pakistan, Nepal and Singapore. When it comes to exports to Arab countries, our biggest competitor is Pakistan. This is because they have better road connectivity with Middle Eastern countries.”

“One of the biggest challenges facing onion export is the rules and regulations of the importing country. For example, Arab countries require exporters to have only 16 – 17 licenses that pertain to quality parameters like land quality, pesticide quality, etc. European countries on the other hand require exporters to show at least 70 licenses.”

Even though USA, Canada, UK, Germany and other European countries import onions on a large scale, India only exports a tiny quantity to these countries owing to the strict quality parameters. “These countries are also very stringent with their rules – for example, if they find even one tiny bug among the onions, they will reject the entire consignment. Therefore Indian onion exporters prefer to focus on Asian and Middle East countries.”

Who consumes Indian onions?

“The huge demand for Indian onions is driven by the Indians settled in these countries. Bangladeshis have food preferences similar to Indians and therefore are huge consumers of Indian onions. Qatar and UAE have a huge percentage of Indians living there. A major chunk of these exported onions go into the HoReCa sector of these countries.”

Indian onions used by Indians settled abroad
Indian onions are used by Indians settled abroad in their cuisine

How can we improve Indian onion exports?

Government Export Policies

“India is in a comfortable situation because we do produce more onions than we consume. Whenever there is a shortage, the Indian government cuts down exports, releases buffer stocks, and starts importing onions. For example, in 2019, the Indian government banned onion exports in order to stabilize the soaring price.”

Currently, the government allows the export of onions only after the domestic requirements are met. The government has also imposed the Minimum Export Price (MEP), the least price at which a commodity can be exported in order to regulate the prices. Even though these measures are beneficial for the masses, they can adversely affect exporters. Therefore, there is a need to have a stable export policy.

“India is in a comfortable situation because we do produce more onions than we consume. Whenever there is a shortage, the Indian government cuts down exports, releases buffer stocks, and starts importing onions.”

Improve yields

“Even though India is the second-largest producer of onions in the world, we have very low yields,” says Navdeep,” For example, India’s output per hectare is 17.13 tons per hectare, while China produces 21.97 tons per hectare, and the US, a whopping 56.39 tons per hectare. With higher yields, we can definitely do more business.”

“Our biggest stumbling block is that the average Indian farmers lack knowledge on basic things like what is the right pesticide to use, the right fertilizers, etc., that can maximise their output. Therefore, they can’t take advantage of all the resources available to them. Now compare him to an American onion farmer who would have in-depth knowledge on the subject. Over the past few years, agritech startups have sprung up that focus on educating and providing farm inputs at affordable rates to farmers. Therefore, we can expect to see better onion yields in the coming years.”

Onion cultivation
Onion cultivation

Increase face to face interactions

“Another thing I notice is that most Indian exporters rarely work on building rapport with their clients,” says Navdeep,” Instead they rely greatly on recommendations from brokers and trusted parties and the LC or Letter of Credit. If a company abroad wants to import Indian onions but lacks the resources, they usually place their assets as collateral and get a local bank to issue an LC. Most Indian exporters therefore focus on the LCs. I have come across many exporters who have never even met their clients face to face even after years of trade, because they’ve been doing business based on these documents. However fraudulent LCs can also be produced and this is a bitter lesson for many exporters. In such cases, those who really suffer are the cargo agents and commodity suppliers who are waiting on their payments.”

“Another thing I notice is that most Indian exporters rarely work on building rapport with their clients. Instead they rely greatly on recommendations from brokers and trusted parties and the LC or Letter of Credit.”

Better storage facilities

60-65% of the total onion production of India is consumed by the domestic market and 15-20% is exported. However, 20-25% is lost during the post-harvest stage with rot and sprouting. Up to 20-25% of the weight of the stored onions is lost during storage. Therefore the right storage method plays a major role in reducing weight loss during storage.

Onions kept in storage
Onions kept in storage

Exporters usually have good storage facilities, and some of these facilities are even maintained in India by international retailers. However, there is room to increase onion storage across the country. This will greatly reduce the high volatility in onion prices, that tends to affect exports.

Hope we were able to shed some light on the much-glamourised export business. The more you get to know the work done by the various stakeholders in the agriculture sector, the more you appreciate the simple onion sitting on your kitchen counter. We hope you enjoyed this article. Tell us your favourite takeaway in the comment section below. Also, stay tuned for more articles from Bijak experts in the future.

About Bijak

Bijak is well aware of the vast domestic and international onion demand and how its rates keep on fluctuating depending upon seasonal factors, production cycles, export imports, etc. Accordingly, Bijak aims to learn from the agricultural ecosystem to create more trading opportunities for Indian onion traders. Bijak is India’s No. 1 agri-trading app that acts as a meeting point for Farmers, Commission Agents, and Suppliers for 100+ commodities. You may call us at 8588998844 or email us at contact@bijak.in. You could also download our app from Google Playstore and Apple App Store.

Bijak also understands the traditional bookkeeping practices of commission agents and the associated hassles. ChargeERP mandi accounting software has been designed by Bijak keeping this in mind. It is a cloud-based accounting software introduced with the core aim of reducing the agent’s workload. ChargeERP is the easiest, fastest, and most secure mandi accounting software available in India. It can be accessed from the mandi, home, or anywhere else using multiple devices. It provides data security with end-to-end encryption. Plus, it doesn’t require any kind of technical or accounting expertise.