Nafed, the sole onion export canalising agency, has raised freight-on-board (fob) prices of onion by $150 a tonne to $475 for Gulf countries.

The move follows a recommendation on August 17 from the Directorate General of Foreign Trade to the agriculture ministry for "temporarily" banning onion exports as a measure to control onion prices.

However, commerce ministry officials did not confirm reports of an eight-day ban on onion exports from August 17, which is reported to have led to crash in onion prices in main producing centres of Maharashtra.

Onions were quoted between Rs 1,455-1,800 a quintal early this week in the producing centres before declining to Rs 150 a quintal on August 18.

Commerce minister Ramakrishna Hegde had assured a delegation from Maharashtra on Sunday that onion exports would be banned if considered necessary for arresting domestic prices.

Exports of onion make up 90 per cent of India's vegetable shipments and brings in over Rs 300 crore annually.

The sources said though the prices for exports had been raised, those requiring Indian onion would still buy it.

Nafed has, however, opposed any ban on onion exports as it is of the view that it could damage India's standing in the global vegetable market.

India's market share could be taken over by other nations if exports were banned and it would take considerable amount of time to build a market again, Nafed had contended with the agriculture ministry in a note pleading against the ban.

Pakistan, Sri Lanka, China, Iran, Egypt and Holland to an extent compete against Indian onions in the global market.

Sources said onion exports during July and august was only one-third of last year's shipments and therefore, prices had not shot up due to exports.

There was a genuine shortfall in onion production this year and the prices were in line with increased demand.

In December last, onion prices had touched a high of Rs 4 a kg in retail outlets as the crop was hit by unseasonal rains then India decided to import onions from Pakistan.

Sources said prices had also shot up as farmers were holding on to their stocks expecting further rise.

They said government was watching the situation keenly and would take action as the situation warranted.

The sources said government was more keen on fulfilling domestic demand first than increasing exports.

However, the Nafed move is being seen as a balance between keeping the export potential alive and meeting the domestic demand.

Sources said the prices were expected to around present level since the new crop was expected to hit the market only in late October or early November.

Onion is grown in three phases in a crop year starting October or the kharif season. It is grown between October-December and January-February and thereafter in the rabi crop during April-May during July-September, usually it is the stocks which is rolled on for domestic consumption.