Prices of Indian onion are dropping in Bangladesh, as the neighbouring country on Friday withdrew the restriction of "minimum export price" at $550 per tonne and slashed export duty to 20 percent from 40 percent.

In Shyambazar, a wholesale market in the capital, the kitchen staple was selling for Tk 95 to Tk 96 per kilogramme yesterday, which was Tk 4 to Tk 5 cheaper than that on Friday.

India's recent decision will likely lead to a reduction of Tk 10 to Tk 12 per kg at wholesale, said Mohammad Abdul Mazed, a wholesaler and general secretary of Shyambazar Onion Wholesalers Association.

However, no new shipment has arrived as of yesterday evening, according to a wholesaler at Karwan Bazar, one of Dhaka's largest kitchen markets.

The trader believes new consignments would significantly affect prices.

"A new consignment of onions will arrive tonight (last night). From what I hear, onion prices are already decreasing," said Mohammad Kalam Sheikh, another onion wholesaler from Karwan Bazar.

The imported bulbs are retailing for a maximum of Tk 105 per kg, whereas it was Tk 115 a week ago, according to state-run Trading Corporation of Bangladesh.

Prices and sales have both dropped since Friday, Mohammad Ali Talukder, a trader at Khatunganj wholesale market in Chattogram, told The Daily Star.

Md Manik, a retail trader at Kazir Dewri in Chattogram city, said he was charging Tk 107 per kg yesterday whereas Tk 113 to Tk 115 last week.

India had banned onion exports last December, fearing domestic shortages after a weak monsoon, according to a report by The Hindu.

In March, the export ban was extended indefinitely, although some shipments were allowed based on diplomatic requests from certain countries.

Farmers became restless as the extended restrictions coincided with high global prices and strong demand.

In May, ahead of general elections in Maharashtra, India's largest onion-producing state, the government lifted the ban.

However, it imposed the export duty and minimum export price.

According to Bangladesh's agriculture ministry, some 39 lakh tonnes of onions were produced in the last fiscal year of 2023-24, which is sufficient to meet domestic demand.

However, the ministry noted that an additional 600,000 to 700,000 tonnes would need to be imported due to post-harvest losses amidst mainly inadequate storage facilities.

Traders in Dhaka's Shyambazar market disputed the ministry's figures, claiming that local production was 15 to 20 percent lower than estimated this year due to crop damage from adverse weather in February.