The Centre on Tuesday said it has directed two of its agencies to "immediately intervene" and purchase red onion crops from the market after prices fell significantly over the last month, resulting in protests by farmers.
Prices of the crop have fallen to as low as Rs 200 ($2.44) per 100 kilograms prompting some farmers to dump the crop in fields in the western state of Maharashtra, the largest producer of red onion in the country, where rates have fallen sharply.
"The experts attribute this fall due to overall increased production in other states, reducing the dependence on the supplies from the major producing district of the country i.e. Nashik," the government said in a statement.
India is the world's biggest exporter of onion, primarily meeting demand of Asian countries including Bangladesh, Nepal and Malaysia.
($1 = 81.8500 Indian rupees)