According to market observers, as festival season draws near, onion prices can rise even more.

Onion prices have increased over the previous month and are expected to surge considerably more as festival season draws closer, according to market analysts.

The surge in India, Nepal's main source market, has resulted in an increase in the price of the important kitchen staple.

Indian media reports state that onion prices have increased to more than IRs70 per kg in Delhi's retail stores and IRs80 per kg in other areas.

India's Union Food Minister Pralhad Joshi flagged off vans belonging to two government cooperatives, the National Cooperative Consumer's Federation (NCCF) and the National Agricultural Cooperative Marketing Federation, to sell onions at IRs35 per kg. Retail onion prices are currently hovering over 47 percent higher than they were a year ago.

When onion prices, a politically sensitive item, start to rise, the Indian central government usually intervenes. Every year, during the later stages of the monsoon, important onion-producing regions suffer crop loss that results in shortages and price increases.

Nepal is directly impacted by the price hike in India because it imports a significant amount of onions from its southern neighbor.

In India, onions are grown in three distinct seasons: the monsoon, winter, and summer.

The Kalimati Fruits and Vegetable Market Development Board's comparative price index shows that the wholesale price of onions has climbed by 71.29 percent in a year and by 20.32 percent in a month.

In the Kalimati market, the wholesale price of onions was Rs128 per kg on Monday, up from about Rs70 per kg a year earlier.

It costs between Rs170 and Rs180 per kg at retail.

"The Potato-Onion Import-Export and Wholesaler Association president, Mohan Baniya, stated that the price in the Nepali market is automatically impacted by the price increases in India."

He added that it would take a month for the fresh harvest to arrive and that "the price will start to cool down once the new harvest starts arriving in the Nepali market."

"The wholesale price will remain around Rs130 per kg until then."

According to traders, customs tariffs and other levies might cause onions to cost up to Rs200 per kg at retail.

"Onions cost approximately Rs65 per kg in India, and after customs duty of Rs45, it costs Rs110, not including transportation," stated Baniya.

Price increases on necessities are a big worry for customers, particularly with the festival quickly approaching.

"It is impossible to prepare many dishes without onions," Banshi Acharya, a Ravi Bhawan resident, remarked on Saturday while purchasing veggies at the Kalimati market.

Even with just whispers, the cost of necessities for daily life goes up. This demonstrates how ineffective the government is at stopping unethical business practices.

In just one month, the number of onions arriving to the Kalimati market has decreased by 31.77 percent. On Friday, 24 tonnes of onions were delivered to the market.
In comparison to the same period in the previous fiscal year, onion imports decreased by 68.14 percent during the most recent fiscal year, which concluded in mid-July.

In the most recent fiscal year, 51,544 tons of onions valued at Rs2.15 billion were imported into Nepal, according to the Department of Customs.

Onion exports were prohibited by the Indian government in December of last year, but the ban was overturned in May. Onions, however, became more expensive after India set a minimum export price of $550 per tonne.

Onions continued to enter through unofficial methods, according to vendors, therefore the supply of onions in the Nepali vegetable market remained steady despite the five-month prohibition. "Rampant smuggling kept prices stable despite the ban."

According to multiple accounts, there were significant pricing disparities for onions in Nepal and India during the previous fiscal year, which encouraged illegal cross-border trading in onions. This was after the government levied a 13 percent value-added tax on vegetables, which included potatoes and onions. According to reports, Nepal Police found thousands of tonnes of onions that had been smuggled in over the southern border.

Prices eventually began to decline as the amount of smuggling increased.

Onions were still being trafficked despite frequent border inspections by Nepali customs officers, especially with motorbikes.

A study conducted by South Asia Watch on Trade, Economics and Environment (SAWTEE) in collaboration with the International Food Policy Research Institute, titled "Dynamics of Informal Cross-Border Trade in Agricultural Products between Nepal and India," claims that a ban on rice and other agricultural exports by India has resulted in a massive smuggling of food across the 1,800 km porous border between Nepal and India in the south, east, and west.

According to the research, India accounts for 60% of Nepal's imports in legal commerce, but the proportions and quantities of informal trade are probably higher.