In a bid to cool the skyrocketing retail prices, govt has abolished import duties on onion and banned its exports for an indefinite period even as wholesale prices started showing signs of decline.

However, the retail prices of the staple vegetable in markets across the country have not shown any change from Tuesday’s level of Rs 70-80 a kg.

Agriculture Secretary P.K Basu expressed confidence that the retail prices would come down in 7 to 10 days with the expected arrival of fresh crops.

Deputy Chairman of Planning Commission Montek Singh Ahluwalia said the spike in onion prices was only a temporary phenomenon due to unseasonal rains.

“To counter the sudden and unexpected rise in prices of onions, the department of revenue has brought down customs duty and countervailing duty to zero,” Finance Secretary Ashok Chawla told reporters in New Delhi on Wednesday.

The government also notified the ban on export of all varieties of onion till further orders.

The steep hike in onion prices set alarm bells ringing in the government, which initially suspended export of ban till 15^thJanuary 2011 and later banned it till further orders.

Onion imports hitherto attracted customs duty of 5 percent while counterveiling duty had been fixed at 4 percent. Countervailing duty is levied to protect domestic producers.

Abolition of import levies, Chawala said, would help in increasing supplies through imports.

On the possible sources of imports, the Finance Secretary, said “how much and from where…I can’t say at this moment.”

These steps come 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.

However, following the earlier decision to suspend exports, the wholesale prices had already started showing a dip.

While, the wholesale prices at the country’s largest trading centre in Nashik dropped by upto 42 percent, the prices at the Azadpur Mandi in Delhi (Asia’s largest fruit and vegetable market) came down by upto 29 percent.

In Laslgaon onion market yard in Nashik (Maharashtra), the wholesale price went down to Rs 3702 per quintal on Wednesday as compared to Rs 5200 per quintal on Tuesday.

Similarly in Pimpalgaon in the same district, the wholesale prices dropped to Rs 3134 per quintal from Rs 5411 per quintal on Tuesday.

However, market experts said the effect of these measures could be seen on the retail prices only after a few days.

The increase in prices of onions has been on account of damage suffered by crops in the key-producing states ofMaharashtra, Gujarat and a few Southern states due to excessive rains. This had led to large-scale hoarding by some traders.

According to sources in agri-cooperative Nafed, which regulates export of onions, total overseas shipment of the vegetable item in November was about 1.10 lakh tonne.

In December, before the decision to suspend exports was taken, the quantum of export was 10,725 tonne.

The exports were mainly to the Gulf countries like Bahrain,Qatar, Dubai, besides Bangladesh and Sri Lanka.

“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 had said on Tuesday.

According to reports, a small 450-tonne consignments of the commodity from Pakistan was on the way into the country across the Punjab border.

A few truck loads of Onion had arrived in Punjab from Lahoreon Monday.

According to an official, as many as 13 truck loads (5 to 15 tonnes per truck) of Onion had been imported from Pakistan.

Compared to the exorbitant domestic prices, the price of the onions imported from Pakistan stood at Rs 18-20 per kg.