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To stabilise onion prices in the local market, the Bangladesh Trade and Tariff Commission (BTTC) has recommended the National Board of Revenue (NBR) to allow duty-free import of onions.
The existing customs duty is 5.0 per cent.
The BTTC put forward the recommendation to stabilise the soaring prices of the spice in the local market, sources said.
Analysts were, however, skeptical about its expected impact on the market and said the policy would have hardly any effect due to the rocketing price trend in the global market.
In local markets, local onions were selling at Tk 140-150 a kg, while imported onions at Tk 120-130 a kg - Tk 20-30 a kg surge in the last one and half weeks.
According to the Trading Corporation of Bangladesh (TCB), prices for domestic onions have surged by 30 per cent and imported onions by 8.0 per cent during the period.
A BTTC prepared report attributes the price hikes to factors including low production in India, increased import costs due to a 20 per cent export duty imposed by the Indian authorities, and domestic production challenges caused by heavy rains.
These conditions have put significant pressure on the entire supply chain, says the BTTC report.
According to the report, onion imports have increased in October compared to September, but the supply still needs to be raised to meet the domestic demand.
To address this situation, the BTTC suggested a temporary withdrawal of the 5.0 per cent import duty to reduce import costs and encourage more imports.
In its analysis, the BTTC says that while 43,937 tonnes of onions were imported in May at an average price of $466.14 a tonne, imports surged to 80,973 tonnes in October as the prices decreased to $428 per tonne.
Despite these imports, domestic onion prices have continued to rise, and LCs have been opened in recent months to import over 0.14 million tonnes.
According to the report, India, the key source of onion imports, imposes a 20-percent duty on onion exports amid reduced production.
This duty has led to higher import costs, ultimately pushing up prices in the Bangladeshi market, it adds.
Meanwhile, the international market has seen a 116.49 per cent increase in onion prices over the past year.
However, an official at the Plant Quarantine Wing under the Agriculture Ministry, told the FE that a total of 0.19 million tonnes of onions have so far been imported in the current financial year.
He said the import declines amid rocketing prices in the neighbouring country as reported by the importers.
Md Bablu Rahman, proprietor of M/S Sotota Banijjaloy at Hilli in Dinajpur, told the FE that the recent duty removals could help ease prices by a maximum of Tk 5.0-7.0 a kg, which is not enough to bring any visual change in the volatile market.
He said the key issue is to keep supply vibrant until the beginning of harvest of seed onion in December.
Consumers Association of Bangladesh Vice President SM Nazer Hossain said the government should form a committee to investigate the issue of the surge in onion prices by Tk 20-30 a kg overnight in the districts like Faridpur, Rajbari, Gopalganj and Pabna, the major hubs.
He said the number of OMS should be increased to give people products at subsidised rates.
Value-chain-expert Prof Dr Rashidul Hasan said the agriculture ministry claimed onion production was 3.5 million tonnes when maximum demand is 2.7 million tonnes.
He said the data mismatch has misguided the government to make appropriate policies.
Amid the current situation, he said, the government should encourage importers even by providing subsidies to bring onions from other countries.
He said imports should be encouraged from all possible channels rather than depending only on India to prevent any sudden volatility in the Bangladesh market.
"We can say that the Indian market is very uncertain as the country imposes a ban or slaps duties all of a sudden," he said.