A fast changing onion trade in South Asia
India’s onion exporters are facing their toughest season in years as Bangladesh reduces purchases and explores other suppliers, while buyers in West Asia and Southeast Asia also rework sourcing. After repeated export curbs from New Delhi meant to cool prices at home, key markets have pivoted to Pakistan and China, and Gulf buyers have looked to Yemen and Iran. The shift has dented Indian volumes and stirred concern among growers in Maharashtra and Karnataka who rely on export demand when harvests peak.
Bangladesh, long the anchor buyer for Indian onions, imported about 7.24 lakh tonnes in 2023 to 2024, roughly 42 percent of India’s total onion shipments. Trade estimates indicate volumes have fallen sharply in 2025 to 2026 as Dhaka combines stricter import permissions with a deliberate push to diversify suppliers. Saudi Arabia has trimmed purchases from India and turned to Yemen and Iran, while the Philippines now tends to buy Indian onions only when shipments from China are tight. Exporters also warn that the movement of Indian onion seeds across borders is helping competitors build local output, which could permanently shrink India’s share in several markets.
Why Bangladesh matters to Indian exporters
Proximity, prices, and taste have made Bangladesh a natural market for India. Short trucking routes and border trade keep freight costs low and transit quick. That matters in a crop where moisture, storage and handling can change quality in days. Bangladesh’s reliance on Indian onions has been heavy at times. Earlier in the decade, Indian supply was estimated to cover well over half of Bangladesh’s imports in many years, and during tight seasons the share was even higher. When India’s export policy is predictable, the flow smooths prices in markets from Dhaka’s Karwan Bazar to Chattogram’s Khatunganj.
India’s Nashik onions are prized for pungency and consistency, attributes valued by the hotel and food service trade. Large auction yards in Nashik, Lasalgaon and Pimpalgaon aggregate supply and set benchmark prices for the region. When export channels falter, those mandis can get flooded with stock, pushing prices below production cost during peak arrivals.
How India’s policy swings reshaped onion flows
Onions sit at the heart of food inflation in India. When prices climb at home because of heavy rain, pest issues, or storage losses, the government often curbs exports to protect consumers. That approach has a long track record. A nationwide export ban in September 2020 came after excessive rain damaged crops. Since then, duties and permitting have been used in quick cycles to manage domestic prices.
Export bans and duties since 2020
In 2020, India prohibited exports of fresh onions to cool the domestic market. In later seasons, the government used export duties and licensing to achieve the same aim. In one cycle, a 40 percent export duty sent an instant signal to traders. In 2025, controls remained tight at various points, with duties in the 30 to 40 percent range, quotas for select exporters, and special permissions for bulk shipments. These moves soothed local prices, but they also spurred buyers abroad to look for steady alternatives, even if those sources were costlier or logistically harder.
What it did to prices in Bangladesh
When India’s duty hit, wholesale and retail prices in Bangladesh climbed within days as importers paused orders and weighed new costs. Traders reported wide gaps between earlier contracts and the new landed prices. Retail tags for onions in Dhaka and Chattogram jumped week to week. Even local onions, which fill most of Bangladesh’s annual consumption but suffer losses in storage, rose as market expectations shifted. At the same time, Bangladesh allowed imports from Myanmar and China to relieve pressure and issued new permits to ease the squeeze, which helped moderate prices after a lag.
Bangladesh sets new rules and new suppliers
Dhaka has paired import diversification with new duties and tighter market management. A 10 percent import duty on onions took effect in mid January, and import permissions for Indian supply have moved more slowly at times as authorities try to align arrivals with local harvests. Traders in Bangladesh say older stocks have thinned at points, and they have sought clear approvals ahead of the local crop’s arrival to maintain supply.
Import permissions and duties
Bangladesh’s tariff move came as Indian policy was still restrictive, and the two sets of measures complicated pricing. Exporters in India argued that the Indian duty, combined with the Bangladeshi duty, made their shipments uncompetitive just as arrivals of late kharif onions were rising in markets like Lasalgaon. Growers, whose kharif and late kharif onions keep only a short time in ambient conditions, felt pressure to sell quickly to avoid losses to rot.
A new sourcing map
Bangladesh’s trade planners have drawn up a wider sourcing list for both potatoes and onions. Cost comparisons show onions can be purchased from China, Pakistan, and Turkey, with unit costs varying by season and logistics. On the ground, Myanmar and China have often filled gaps when India curbed supply. Pakistan has also emerged as a practical option, a noteworthy shift given the limits in diplomatic ties over the past decade. In past crises, Bangladesh even arranged government level onion purchases from Pakistan after long gaps in trade, a reminder that food needs can reshape routes quickly.
For the Gulf, Saudi importers have relied more on Yemen and Iran during recent Indian curbs. In Southeast Asia, the Philippines draws from China first, then India if gaps appear. Floods and weather risks remain a variable for all these sources. Heavy rain in Pakistan’s Sindh region disrupted supply this year and lifted prices at times, while unseasonal rain in western India delayed red onion arrivals. Buyers are now spreading risk across multiple origins rather than depending on a single source.
Seeds, storage, and the push for self sufficiency
Indian exporters worry that the spread of Indian onion seeds to neighboring countries is accelerating rivals’ production. Vegetable seed trade is hard to police across open borders, and varietal traits, like the taste associated with Nashik red onions, can migrate with growers who are familiar with Indian agronomy. The claim is that better seed and know how are lifting yields in Pakistan and Bangladesh, which could permanently reduce imports from India once local production meets a bigger share of demand.
Bangladesh is also trying to fix chronic storage losses that force seasonal imports even in good harvest years. For onions, weaknesses in post harvest handling and the lack of modern storage cause a large share of the crop to spoil. With better storage, traders can buy during peak arrivals and sell through lean months, keeping prices steadier. Investments in modern cold storage for potatoes have improved outcomes in that crop. Extension of similar technology and financing to onions is a policy priority for Dhaka.
Bangladesh’s Agriculture Secretary, Dr. Mohammad Emdadullah Mian, has set a clear target for reduced reliance on imports and stronger returns for farmers. At a recent seminar in Dhaka, he described a plan to build production and storage while enforcing financial discipline in farm projects.
“Bangladesh aims to achieve self sufficiency in onion and ginger within three years, with a view to halting imports. Farmers deserve a fair price for their produce, and policy will reflect that.”
Reaching that aim will require upgrades in seed, mechanization, storage and market linkages. It will also require coordination across ministries so that import permissions, tariffs, and domestic procurement move in step with harvest calendars. If Dhaka succeeds, the country’s import needs, currently substantial in lean months, could shrink materially by the middle of the decade.
Winners and losers from the realignment
In India, the pressure shows up first at the mandis. As late kharif arrivals climb, volumes at Lasalgaon have increased from about 15,000 quintals a day to more than 20,000 quintals on busy days, with more supply expected at peak. Wholesale prices have dropped steeply from December levels, and growers warn that returns could fall below average costs if export channels stay clogged. Fresh onions from these seasons have a short shelf life in warm conditions, so farmers have little time to wait for better prices.
Exporters face a different set of costs. Sudden policy switches, including duties and permissions, tend to force contract renegotiations or cancellations. That means penalties, idle packing capacity, and weak credibility with buyers. The result is fewer long range commitments with traditional partners in Bangladesh or the Gulf, exactly the kind of ties that once helped stabilize prices at home as well.
On the other side of the border, Pakistani growers have gained a bigger window to sell into Bangladesh and the Gulf. At the same time, their own weather risks, like floods in Sindh, keep that advantage from becoming permanent. Chinese exporters continue to be the default option for several Asian markets, including the Philippines, where established buyer relationships and year round supply work in their favor. Gulf buyers, historically comfortable with India, have now built working links with Yemen and Iran, which could endure if India’s export policy remains unpredictable.
What Indian exporters can do now
The first step is predictability. Exporters and growers say a clear calendar of onion export rules, with transparent triggers for duties or quotas, would allow contracts to be priced and executed without last minute shocks. A rapid mechanism to review and taper duties when arrivals surge at home would help stabilize mandi prices while preserving export lanes, especially during late kharif peaks when storage losses bite.
Quality and traceability can lift access to premium buyers. Some Indian packers are investing in QR codes that show farm origin, pesticide data, and transit times. That level of transparency is essential for supermarket chains in Europe and parts of Southeast Asia. While it adds cost in the short run, it opens doors to higher value orders that are less sensitive to seasonal price swings.
Market development also matters. Rebuilding trust with buyers in Bangladesh will require consistent supply and fair pricing. Suppliers can shape long term agreements with flexibility clauses for weather risks, backed by insurance and diversified sourcing within India. Upgrades in packhouses near ports, better grading, and calibrated varieties that match end market preferences will support India’s reputation for consistent quality.
Finally, the seed question needs careful handling. Exporters have asked the government to restrict onion seed movement to competitor markets. Any step in that direction should be weighed against research goals and private seed trade rules. A practical path is to invest in varietal improvement at home while protecting intellectual property and monitoring cross border flows more closely.
Food security lessons for the region
Onion trade in South Asia reflects a larger pattern. Climate shocks and weather volatility routinely unsettle output in India, Pakistan, and Bangladesh. Export restrictions are a common response to protect consumers at home, yet they push neighbors to diversify suppliers and invest in self sufficiency. The cycle repeats when prices settle, only to be disrupted by the next weather event.
Reducing this volatility calls for better storage, smarter market management, and closer coordination between neighbors. Regional dialogues on seasonal needs, shared data on crop progress, and emergency supply arrangements could prevent sudden shortages. Investments in storage and logistics pay off by keeping fresh produce moving through lean months. For consumers and farmers alike, steadier prices are the outcome that matters most.
Key Points
- Bangladesh cut onion purchases from India and is buying more from Pakistan and China, while Gulf buyers turned to Yemen and Iran.
- India’s export restrictions, including duties of 30 to 40 percent in 2025 and earlier bans, pushed buyers to diversify.
- Bangladesh imported about 7.24 lakh tonnes of Indian onions in 2023 to 2024, around 42 percent of India’s exports; volumes have dropped in 2025 to 2026.
- Bangladesh imposed a 10 percent import duty and has tightened import permissions to align arrivals with local harvests.
- Trade planners in Dhaka listed China, Pakistan, and Turkey among viable onion sources, with unit costs varying by season and logistics.
- Exporters in India say repeated policy shifts cause contract cancellations and depress mandi prices during peak arrivals.
- Bangladesh aims to be self sufficient in onion and ginger within three years, backed by upgrades in storage and farm systems.
- Exporters warn that movement of Indian onion seeds is helping neighbors scale output, potentially reducing India’s market share.
- Quality, traceability, and predictable policy can help Indian exporters regain share, especially with supermarket buyers.
- Regional storage upgrades and coordinated trade measures can temper price spikes during climate driven supply shocks.
