Underpriced exports to UAE | Ban on onion exports

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Context

The Centre has permitted 24,400 MT shipments to the UAE amid a ban on exports ‘till further orders’; exporters allege selling price is being set too low, triggering windfall profits for selected UAE importers

Details

To check runaway onion prices, the government imposed a minimum export price (MEP) of $800 per tonne from 28 October to 31 December 2023.
In August, the government imposed a 40% duty on the export of onions to improve supplies of the staple vegetable in the domestic market until 31 December 2023.
On 8 December 2023, the government banned the export of onions till 31 March 2024. This has been extended indefinitely. The DGFT notification said the export of onions will, however, be allowed on permission granted by the central government based on requests made by the countries.
Now that the government has allowed exporting the of onions suddenly, the exporters are protesting because the exporters are being paid a low price.
Indian traders have alleged that while Indian farmers were paid ₹12-15 a kg for the onions, importers in UAE sold these onions in stores for over ₹120 per kg

Why were the onion exports banned?

Tight global supplies and a dry spell induced by the El Niño weather phenomenon prompted the government to restrict onion exports during the 2023-24 financial year

Impact of the ban

Following India’s export ban, global onion prices have shot up in recent months to about $1200-$1500 a tonne.
Thus the UAE had demanded that the export ban be lifted.
Onion shipments to UAE are being channeled through the National Cooperative Exports Limited (NCEL) on a government-to-government basis.

National Cooperative Exports Limited (NCEL)

National Cooperative Exports Limited (NCEL) was set up by The Ministry of Cooperation under the Multi-State Cooperative Societies (MSCS) Act, 2002.

NCEL will provide a complete ecosystem for the promotion of exports mainly of agri commodities for the benefit of our farmers, in which India has a comparative advantage.

The NCEL has provision of two kinds of members, as per details given below:

i)Ordinary Members: The following shall be eligible to become ordinary members of the NCEL: -

1. Any multi-state co-operative society or any co-operative society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State or UT;
2. The National Co-operative Development Corporation (NCDC) established under the National Co-operative Development Corporation Act,1 962 (26 of 1962);
3. such class or classes of persons or associations of persons as may be permitted by the Central Registrar having regard to the nature and activities of the Society.

No individual shall be eligible to become an ordinary member of the NCEL.

ii)Nominal or associate member: The society may, in the interest of the promotion of its business, admit any person, including cooperative banks, as a nominal member or associate member by the provisions of the Multi-State Co-operative Societies Act on payment of a non-refundable fee of {₹1,00,000/- (Rupees one lakh only).

Source: https://www.thehindu.com/news/national/onion-traders-cry-foul-over-underpriced-exports-to-uae/article68040330.ece

PRACTICE QUESTION

Q. Consider the following statements about “'National Cooperative Exports Limited (NCEL)”

National Cooperative Exports Limited (NCEL) was set up by The Ministry of Home Affairs under the Multi-State Cooperative Societies (MSCS) Act, 2002.
The National Co-operative Development Corporation (NCDC) is an ordinary member of National Cooperative Exports Limited (NCEL).
Any person, including cooperative banks can be admitted to this body as an ordinary member by making them pay a nominal fee.

How many of the above statements is/are correct?

Only one
Only Two
All three
None

Answer- A