How to Start an Onion Business in India

An onion business in India turns on one decision: whether you will hold stock. A trader who buys from farmers or a mandi and sells within days needs a trading licence, working capital and reliable buyers. A trader who stores onions for months to catch a higher price takes on the loss that ICAR puts at 30 to 40 per cent of the crop in storage, and that loss decides most outcomes. Exporting is the same trade with more paperwork and a policy risk that has changed four times since December 2023. Drying onions into flakes or powder is a factory business, not a trading one.

If you are starting with your own money, begin as a trader near an onion market, sell every lot within a week, and add storage only after you have watched one full price cycle.

Which onion business should you start: trading, export or processing?

Trading needs the least capital, export adds registrations and policy risk, and processing sidesteps storage by moving you into manufacturing.

Export is smaller than it looks. APEDA reports fresh onion exports of about 15.5 lakh tonnes in 2025-26 against a crop of 307.37 lakh tonnes, so roughly one tonne in twenty leaves the country and the domestic mandi price sets most margins. Processing is a separate business: the vegetable dehydration business and onion processing setup guides cover its machines and economics. For other overseas products, see export business ideas.

How much stock do you lose in storage, and what price rise covers it?

ICAR's onion research directorate (DOGR) tracked storage over 120 days, roughly the wait from the March to June rabi marketing season to October or November. Ordinary ventilated storage lost about 55 per cent, a 0 °C cold store 5 per cent and DOGR's 27 °C design about 7 per cent, though cold-stored bulbs sprout fast once removed.

A loss costs more than its share, because the rest must sell high enough to repay what you paid. The table ignores bags, labour, interest and market fees.

Store only lots bought cheap enough to survive a 30 per cent loss, and plan on a 50 per cent loss for any shed whose supplier shows no measured data. Renting space in a cold storage business saves construction cost but not the sprouting.

What do onions sell for, and can anyone predict the 2026 price?

The all-India average retail price was ₹37.87 per kg on 26 August 2026, and the Centre began selling buffer onions at ₹35 per kg through NCCF, NAFED, Safal and Kendriya Bhandar, according to the same PIB release.

Mandis quote by the quintal (100 kg). On 17 October 2026 a commodityonline listing showed Lasalgaon, the main Nashik market, at an average ₹4,000 per quintal (₹40 per kg), within a range of ₹1,000 to ₹4,501. The best lots fetched over four times the poorest, which is why grading pays.

No one can give a reliable price for the rest of 2026. Watch daily mandi rates, buffer releases and any DGFT notice on exports.

Which licences does an onion business need?

A trader working inside one state needs the first row. The rest begin when you export.

Fresh onions are on the GST exempt list (Notification 2/2017), so a trader selling only loose onions may have nothing to charge. Branded packs, processed products and exports can change that, so ask a chartered accountant. Udyam registration gives access to MSME schemes.

How do you set up an onion trading yard, and how much money does it need?

1. Fix the buyers first, because each wants a different grade and pack.
2. Buy at the farm gate, through a commission agent or from a farmer producer organisation, agreeing weight and rate before loading.
3. Sort and grade: remove doubles, cut and sprouted bulbs, then separate by size.
4. Store only dry, firm bulbs in a shed where air moves through the stack.
5. Bag, weigh and load, and put any credit in writing.

In a Lok Sabha reply of 1 April 2025 the government gave the MIDH cost norm for low-cost onion storage as ₹10,000 per tonne with a 50 per cent subsidy. A 100-tonne shed at that norm costs ₹10 lakh, or ₹5 lakh after subsidy if you qualify, while the stock inside it at ₹40 per kg is ₹40 lakh, so purchase money is the real investment. Ask your state horticulture department whether the scheme is open. A subsidy cuts the shed's cost and leaves the 46 to 55 per cent losses ICAR measured in ventilated sheds untouched.

What goes wrong in an onion business, and how fast can export rules change?

Export policy has moved faster than a storage season.

No later restriction turned up in the sources checked for this page, but confirm the position on the DGFT site before every order and put a release clause for government curbs into export contracts. Extend buyer credit only to buyers you have dealt with, and reject weak export lots at your yard, since importers check size, sprouting and pesticide residue.

What should you do in the first 30 days?

1. Spend five mornings at the nearest onion mandi, noting grade-wise rates and who buys which grade.
2. Apply for the trading licence with the market committee.
3. Run a few small lots bought and sold within a week, recording every rupee of transport, labour and market fee.
4. Ask the state horticulture department about the storage subsidy before building.
5. Consider export only after an importer sends a written enquiry, then get the IEC and APEDA registration.

Other units that use farm produce as raw material are listed under food processing business ideas.

Frequently asked questions about starting an onion business

What is the profit margin for onion export?

No reliable published margin exists, so any single figure is a guess. Your margin is what the importer pays minus onions, grading, packing, freight and certificate costs. APEDA's 2025-26 figures, about US$397 million for 15.5 lakh tonnes, average roughly US$257 per tonne.

Do onions take 2 years to grow?

No. A bulb crop is harvested in one season; ICAR describes rabi onion as harvested and marketed from March to June. Onion is biennial only when grown for seed.

Can I start an onion business from home?

Only the office work can run from home. Licences, buyers and stock handling sit at a mandi or rented yard, so source and sell from the house but weigh, grade and store at the yard.

Which onion varieties do exporters ship?

APEDA lists red and white types such as Agrifound Dark Red, NHRDF Red and Pusa Red, and yellow types for European buyers such as Granex 55 and Tana F1. Ask each importer for colour and size first.