With onion prices skyrocketing to as much as Rs 85 per kg in some retail markets, the Indian government on Wednesday said it has brought down customs duty on imports of the commodity to zero from 5 per cent.
"The customs duty on onions has been brought down to zero," Finance Secretary Ashok Chawla told reporters.
The step comes amid a sharp rise in the price of onions up to Rs 70-85 per kg in retail markets across the country from just Rs 35-40 a few days ago on account of damage suffered by crops in the key-producing states of Maharashtra, Gujarat and a few Southern states due to excessive rains, which has led to large-scale hoarding by some traders.
The steep hike in onion prices set alarm bells ringing in the government, which has imposed a ban on onion exports till January 15, 2011, with a view to increase availability in the domestic market. However, it is likely to take at least three weeks before the common man gets any relief from the measure.
"Onion prices will remain high for the next 2-3 weeks and the situation is likely to improve only after that," Food and Agriculture Minister Sharad Pawar said on Tuesday.
While Pawar had indicated the government did not have any plans to import onions to bring down prices at home, small 450-tonne consignments of the commodity from neighbouring Pakistan have been making their way into the country across the Punjab border since yesterday.
Compared to the exorbitant domestic prices, the price of the onions imported from Pakistan is just Rs 18-20 per kg.
A worried Prime Minister Manmohan Singh, whose government has been grappling with high inflation for much of the past year, has also stepped into the picture and asked the agriculture and consumer affairs ministries to take effective steps to rein in onion prices.
"The Prime Minister desires all necessary steps to effectively deal with the extraordinary price rise of onions and bring the prices down to an affordable level," an official source said, quoting letters written by Singh to the ministries concerned.