India has decided to allow onion exports to Bangladesh on a limited scale through a government-to-government arrangement.

According to a report in The Economic Times on Monday (February 19), a decision has been taken to resume export of onions to Bangladesh and five other countries on the advice of India's Ministry of External Affairs.

A source familiar with the matter said that a limited number of onion exports have been allowed for the sake of bilateral relations, but no decision has been taken to lift the ban on onion exports altogether.

The details of the exporting agencies could not be ascertained, the report said.

The other five countries allowed to export are Nepal, Bhutan, Bahrain and Mauritius.

India, the world's second-largest onion exporter, has banned shipments of the kitchen staple from December 2023 to March 2024 due to rising domestic prices and potential shortages. The ban has led to a spike in onion prices in neighboring countries such as Bangladesh.

As onion prices rose from August 2023, India's finance ministry imposed a 40 percent export duty to limit shipments. However, it failed to have the desired effect due to insufficient invoices, prompting the government to impose a minimum export price of $800 per ton on onions from October 28th.

A number of large exporters wrote to the Indian government on Sunday suggesting that instead of banning onion exports altogether, the government should restrict onion exports, adding that any large exports could lead to a sharp rise in prices in the domestic market. The report said.

Earlier on February 9, Bangladesh sought India's support to supply essential commodities, especially onions from India, ahead of the Muslim fasting month of Ramadan to keep prices of essential commodities stable.

"We discussed the import of perishable items from India. We had detailed discussions to get 50,000 tons of onions and 100,000 tons of sugar before Ramadan," External Affairs Minister Hassan Mahmood told reporter Piyush Goyal after a meeting with Indian Commerce and Industry Minister .

The foreign minister mentioned that the new government of Bangladesh under the leadership of Prime Minister Sheikh Hasina has embarked on a new journey with a new mission and one of the top priorities of the government is to address the issue of prices of essential commodities.

Hasan Mahmood asked Piyush Goyal to take necessary measures to ensure uninterrupted supply of essential commodities to Bangladesh before Ramadan.

Piyush Goyal said India is committed to ensure economic and financial stability of Bangladesh.

He assured to fulfill the Bangladesh Foreign Minister's request for supply of essential commodities.

The Indian minister emphasized on further improving trade and commercial relations between the two countries.

Hasan Mahmood also asked Piyush Goyal to remove tariff and non-tariff barriers on Bangladeshi exports.