MMTC signs second onion import order, to buy 11,000 tonnes from Turkey

The company had placed an order for the first consignment of 6,090 tonnes of onion from Egypt

State-owned trading firm MMTC, which is importing onion on the behalf of the Centre, has placed an order of 11,000 tonnes of edible bulb from Turkey as part of its efforts to boost domestic supply and ease soaring prices, sources said. This is the second import order placed by the MMTC. The public sector firm is already importing 6,090 tonnes from Egypt.

Last month, the Union Cabinet approved importing 120,000 tonnes of onion to improve the domestic supply and control prices that have skyrocketed to Rs 75-120 per kg across major cities now. The Centre has already banned exports and imposed stockholding limit on wholesalers and retailers for indefinite period.

According to sources, MMTC has contracted 11,000 tonnes of onion imports from Turkey and the consignments are expected in January next year. The company had placed an order for the first consignment of 6,090 tonnes of onion from Egypt which will be arriving at Nhava Sheva (JNPT), Mumbai in the second week of this month. The imported onion is being offered to state governments for distribution at the rate of Rs 52-55 per kg ex-Mumbai and Rs 60 per kg ex-Delhi.

To monitor onion prices, a Group of Ministers, chaired by Home Minister Amit Shah, has already been constituted. Finance minister, consumer affairs minister, agriculture minister and road transport minister are also members of this panel. A Committee of Secretaries (CoS) and Consumer Affairs Secretary Avinash K Srivastava is also constantly reviewing the situation…

Onion prices are fueling inflation in India but RBI may still ignore it

While policy makers will assess the accompanying food-price data, it may not be compelling enough to hold their attention

India’s headline inflation probably breached the central bank’s 4% medium-term threshold last month, but that surge — driven by high onion prices — is unlikely to distract monetary policy makers from their focus on growth.

Economists pegged the gains in consumer prices at 4.35% in October, according to the median of 33 economists surveyed by Bloomberg. That would be the first above-4% print since July 2018 and the highest since June last year.

While policy makers will assess the accompanying food-price data, it may not be compelling enough to hold their attention: underlying inflation — a measure of demand in the economy — is expected to remain subdued. First indications came via purchasing managers surveys, which signaled weak manufacturing and services activity in October.

An overwhelming majority of data have pointed to continued weakness in the economy that expanded 5% in the quarter ended June — the slowest pace in six years. The slump gives members of the Reserve Bank of India’s Monetary Policy Committee reason to stick with their accommodative policy stance, although room for a deep cut may be limited given the rebound in headline inflation.

With the RBI already cutting interest rates five times this year, by a cumulative 135 basis points to 5.15%, economists expect the rate to fall further to 4.9% by the end of March 2020. “We expect the RBI to maintain its easing bias on the back of sluggish growth, and weak generalized inflation pressures,” said Teresa John, an economist at Nirmal Bang Equities Pvt., who sees a 15 basis-point cut at the next policy meeting in December. Should growth numbers “surprise substantially on the downside below 5%, we would not rule out a large rate cut.”

Read More: Onion Price