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International relations

Flood of Chinese onions shows Nepal's push to ease India reliance

Kathmandu responds to Indian export ban by looking north

A man stands on the back of a vehicle carrying sacks of onions in the ancient Nepalese city of Bhaktapur. India has banned onion exports in response to flooding, forcing Nepal to turn to China for supplies.   © Reuters

KATHMANDU -- Landlocked Nepal has long been dependent on its giant southern neighbor India for much of its trade with the outside world. But it has begun looking northward to China for essential imports, including a key ingredient in Nepalese cuisine: onions.

The humble onion is a symbol of the region's fraught geopolitics. The government of Prime Minister K.P. Oli, head of the Nepal Communist Party, is trying to diversify the country's trade. Nepal has signed a number of trade treaties and other agreements with China in such areas as hydropower, cement production, railway development and airport construction. But its deepening ties with China make India anxious. New Delhi has reacted by putting pressure on its smaller neighbor in order to maintain its dominance in South Asia.

In September, India placed restrictions onion exports as it grappled with a shortage caused by widespread flooding. That forced Nepalese traders to look to China to make up the shortfall. Nepal relies on India for more than 60% of its total imports. In the case of onions, the figure has been 80% to 90%.

But since mid-Novemmber Chinese onions have flooded in, mostly through the border town of Tatopani, northeast of the capital, and Rasuwa, a district to the north. "Around eight to 10 vehicles are entering Nepal every day, carrying [a total of] 100 tons worth of Chinese onions... due to the shortage. The onions cost 40-60 cents per kilogram, which amounts to 45 to 68 Nepalese rupees per kilogram. And all of them go directly to Kathmandu," said Keshav Raj Oli, a customs officer at Tatopani.

"The number of vehicles entering Nepal is not constant every day, but around 100 vehicles entered yesterday, and 30 today. The vehicles usually travel from 3,500 km away... and the journey is arduous as there's a blockage sometimes, due to dreadful weather," he added.

Because the Himalayan country cannot meet its own needs solely with local production, traders rely on imports. According to official figures, Nepal produced 239,000 tons of onions from around 20,000 hectares, while 310,000 tons were imported, mostly from India. But since October, nearly all imports from India have ceased.

The ban on Indian onion exports comes as no surprise to Nepalese consumers, who have fresh memories of a previous Indian blockade in 2015. As Nepal struggled to recover from a deadly earthquake in April that year, India halted a number of key exports, including onions, other food items and petroleum products. Kathmandu restaurants had to serve dishes with few vegetables, sardonically called the "Modi menu" -- a reference to Indian Prime Minister Narendra Modi. Oli who was previously prime minister in 2015 to 2016, vowed to ease the country's dependence on India by doing more business with China.

India also bans the export of onion seeds to Nepal, forcing it to depend on imports. The Nepalese government responded in 2008 with a five-year plan titled "Mission Onion" aimed at making the country self-sufficient. The goal was to increase production by 271,634 tons by expanding cultivation in 10 southern districts of the country. But Mission Onion was a dismal failure, raising output by just 22,593 tons grown on an additional 2,149 hectares. The effort was stymied by a lack of cold storage and ineffective policy implementation.

That has left imports to fill the gap. "After India imposed the ban... the only immediate plan right now is to import from China and satisfy customers' needs," said Posta Raj Bastola, an officer at the Rasuwa customs office. "Even garlic is imported from China," he said.

Chinese onions are cheaper than Indian ones, but Nepalese consumers are not used to the taste. Nevertheless, tight supplies have sent the price of Chinese onions skyrocketing, too. When onions from China began arriving at Nepal's wholesale markets in mid-November, they went for 100 rupees per kilogram, but the price soon jumped to 160 rupees; Indian imports cost around 200 rupees per kilogram.

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