Commerce ministry moves to cancel onion import duty

In the wake of soaring onion prices for nearly two weeks, the Ministry of Commerce has recommended that the National Board of Revenue (NBR) withdraw a 5% duty on import of the cooking ingredient. 

Revenue board sources said they were working on it and a circular would be issued soon in this regard. 

Onion prices have been climbing up for the last two weeks in local markets at a time when prices of the bulb are also on the rise in neighbouring India.

Prices of imported onions have doubled to Tk50-55 per kg from Tk25-30, while locally grown onions are now priced at Tk60-65. Some traders have even been selling red onions at Tk70 per kilogram in Dhaka. 

However, prices were hovering around Tk40-45 even two weeks ago.

According to the market monitoring updates of the state-owned trading corporation, prices of locally grown onions spiked 60% while imported onions hiked to more than 72% in price in the last week. 

On September 7, the commerce ministry sent a letter to the revenue board asking for the import duty withdrawal so that a 2019-like onion crisis does not recur this year.

The ministry in the letter said, "The local onion market slightly depends on import. Prices of the cooking essential destabilized a few times in the recent past and the crisis took a severe turn in the last year."

The commerce ministry in the letter expressed its concern about the need to avert a negative situation this year. The ministry noted that a hike in onion prices in India had affected the local market.

"Therefore, it is recommended that the 5% import duty on onions – which was slapped in the 2020-21 fiscal year to protect the interests of local farmers -- be withdrawn," said the ministry in its letter to the revenue board. 

According to the ministry, the duty withdrawal instruction is aimed at reining in prices of onions and ensuring supplies of the bulb in September-March – a non-cultivating period for the bulb in Bangladesh. In the last onion harvesting season, the Bangladesh Trade and Tariff Commission recommended that the commerce ministry control the import of the cooking ingredient.

Assessing the production, market supply and prices, the commission recommended levying a 20% import duty on onions to protect the interests of local onion growers. However, the government in the national budget for the 2020-21 fiscal year slapped a 5% duty on onion import. 

India in September last year banned onion export to meet its own demand. The restriction fuelled a rise in onion prices in Bangladesh almost overnight, with the cooking essential skyrocketing to a price of Tk250 per kilogram. 

People in the country had to suffer for months due to the unusual onion prices. At the end of last year, the government had to import onions from Myanmar, Pakistan, China and Egypt for the first time.

Despite such measures, the local onion market did not return to normalcy until locally grown onions arrived in the market.   

Sources at the revenue board also said the commerce ministry, in another letter, has also asked it to take measures to release onion consignments promptly at land and seaports. Meanwhile, the ministry announced that the Trading Corporation of Bangladesh will begin onion sales in the open market from September 13.