The slump in onion prices is turning out to be a major concern for the Narendra Modi-government, which has doubled the export incentives to 10 per cent to boost shipments and ensure better returns for farmers.

“The government on Friday increased the export incentives under the Merchandise Exports from India Scheme (MEIS) to 10 per cent from the existing 5 per cent in the interests of farmers,” an official statement said.

This will result in better prices for onions in the domestic market. Wholesale prices of onions are subdued at present because of the increase in the arrival of the fresh crop at the mandis, it said.

Rewards under the scheme are payable as a percentage of realised free-on-board value and an MEIS duty credit scrip can be transferred or used for payment of a number of duties, including the basic customs duty.

In recent weeks, farmers have been blocking highways and dumping onions as the prices have slumped to about Rs 1 per kg in the wholesale markets even though it takes around Rs 8 to produce a kg of the bulb crop. Maharashtra produces more than 30 per cent of the country’s annual onion crop, followed by Karnataka. Onion is usually cultivated four times a year — early kharif, kharif, early rabi and rabi.

Onions comprise less than one per cent in terms of value of the country’s agricultural production.