DGFT extends MEIS benefit for onion exporters till March 31, 2017

The Dollar Business Bureau 

The DGFT in its latest notification NO.49/2015-2020 dtd December 30, 2016, has extended the MEIS benefit at 5% FOB for ‘Onions Fresh or Chilled’ under ITC (HS) code 07031010 for further 3 months i.e., export till March 31, 2017. 

Onion major producing states like Maharashtra,  M.P., Karnataka, Gujarat and Rajasthan have seen bumper crop production in September. Fearing a fall in prices as a result of the bumper crop the government of Maharashtra had appealed to the Ministry of Commerce to extend the MEIS duty benefits beyond Dec 31 in order to help the exporters of onion. 

In September the Maharashtra State Finance Minister in his letter to the Finance Minister Jaitley had appealed that, “since the crop of onion is huge and early disposal of the product is required, I request you to please take up the matter at an appropriate level to ensure that inclusion of onion exports under MEIS continues.” He also mentioned that due to higher production, farmers and exporters in other onion producing states like M.P., Rajasthan, Gujarat and Karnataka too could be affected. "Maharashtra onions can be consumed within the state or exported out of the country. If onions cannot be exported, there will be a collapse of onion prices and farmers will have to face severe crisis and they will not be able to recover their production costs," he said. 

The harvest of kharif onions too had begun in most of the states. This could add to the already existing quantity of onions as kharif onions cannot be stored for a longer period, which in turn would have a detrimental effect on the farmers who would then be forced to abandon the crops in the field without harvesting. This would lead to the farmers incurring huge losses as they would not recover their production costs. 

Exports of onion were at 13,56,381 tonnes in the April-September period of this fiscal. The country's total onion production in 2015-16 crop year (July-June) is estimated to be higher at 20.99 million tonnes from 18.92 million tonnes last year. Maharashtra alone produced more than one-fourth of the country's total production of onion.

Currently, the Central government gives grants to export onions under the trade production encouragement scheme which would expire tomorrow i.e. December 31. It is due to this scheme alone that onion exporters could compete in the international arena. 

Keeping this in mind it is likely that the DGFT and the Ministry of Finance have given further extension to benefit onion exporters for another 3 months.