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Onion is one of the most demanded vegetables across the year in India. There is a major market in India for onions. Any main course in Indian household is almost impossible without onion. We are not only growing the Onions for our own needs but also emerging as one of the major exporters of Onion. India consumes about 13 lakh tonnes of onions every month, making it one of the most important vegetable crops for household consumption. In the fiscal year 2022-23, India exported approximately 2.5 million tonnes of fresh onions, with a total export value of around ₹4,522 crore. This signifies a significant volume of onions being sent to international markets, contributing to India's agricultural exports.
Commercial Use
Onions have a wide range of commercial uses across various industries. Here are some of the key commercial applications of onions like Food Processing, Restaurant and Catering, Fast Food Chains, Snack Foods, Retail Grocery, Food Service Industry, Food Seasonings and Spices, Sauces and Condiments, Pickling, Bakery Products, Ethnic and International Cuisine, Food Retail and Wholesale, Pharmaceuticals, Cosmetics etc.
These diverse commercial uses underscore the versatility and significance of onions in various sectors, making them a valuable and essential commodity in the global market.
Onions offer a wide range of possibilities for culinary creations. They can be transformed into various products, including fresh onions, onion paste, dehydrated onion flakes, onion powder, onion oil, onion vinegar, onion sauce, pickled onions, onion wine, and even onion-based beverages. These minimally processed onion variations are becoming increasingly popular due to their convenience and versatility. Estimates suggest that approximately 6.75 percent of the total onion production is dedicated to processing, with the remaining percentage allocated to factors such as losses, consumption, exports, and bulk seed requirements. This trend underscores the growing demand for processed onion products in today's market, driven by their ease of use and handling.
Emerging Trend of Onion Oil: In today’s health conscious world the onion oil has marked its importance. Onion oil finds its way into certain food products as a natural food preservative. Various techniques, including distillation, solvent extraction, supercritical fluid extraction, among others, can be employed to extract onion oil.
Onion oil has gained popularity in the cosmetic industry due to its perceived benefits for hair growth and addressing various hair-related issues. It is being incorporated into hair care products such as shampoos, conditioners, serums, and hair masks.
Global Onion Products Market Outlook
Onion powder, derived from dehydrated fresh onions, has gained immense popularity, not only in urban households but also in the global food processing industry. This dehydration process efficiently reduces the water content of fresh onions while preserving their nutritional value, resulting in a standardized and hygienic product.
Dehydrated onion flakes, a product of this process, can be further crushed and refined to produce onion powder. This dehydration technique is invaluable for preserving onions, especially given their seasonal nature and challenges in typical storage. The global market for onion powder, although smaller in scale than the overall onion market, is experiencing robust growth, with an impressive annual expansion rate of 5 percent. This trend highlights the increasing demand for onion powder in various culinary applications, solidifying its role in the global food processing landscape.
The global dry onion market is expected to grow substantially, with CAGR of 6.4 percent. These dry onions find extensive use in both processed and unprocessed foods, including sauces, soups, salads, gravies, meats, seafood, and more. While dry onions may lack the intense aroma of fresh onions, they still impart a rich flavour to a wide range of dishes. The global food processing industry is swiftly embracing dry onions, utilizing them in various dishes due to their flavour, nutritional value, and suitability for long-term storage.
The market for dehydrated onions is experiencing steady growth. This expansion in the dehydrated onions market is driven by increasing consumer awareness regarding nutritious dietary choices and the extended shelf life offered by dehydrated food products.
Indian Market Outlook
The Indian onion powder market is poised for significant growth, with an expected Compound Annual Growth Rate (CAGR) of 6 percent. India's onion powder sector is playing a vital role in driving the global market's expansion, with Gujarat leading the way and commanding the largest market share within India. Onion powder enjoys widespread popularity in India due to its numerous advantages, including ease of transportation, extended shelf life, low calorie content, and ready availability. This versatile product is used extensively in Indian cuisine for a variety of culinary applications.
Its increasing use in the production of ready-to-cook food items like noodles, oats, pasta, instant mixes, and frozen foods is a key driver of the Indian onion powder market. Food manufacturers in India are adapting their practices to align with Indian standards for processed foods, further propelling the industry forward. The Ministry of Food Processing Industries (MoFPI) is actively encouraging industry expansion by increasing investments, a move that is expected to accelerate the growth of the onion powder market in India even further.
Dehydrated Onions Market in India
India stands as the world's second-largest producer of dried onions, a remarkable feat considering its position among the top five onion-producing nations globally. The inherent price volatility of onions, however, presents a valuable opportunity to promote the consumption of dried onions nearly every year.
Despite ongoing fluctuations in onion prices due to seasonal factors, the sales of dehydrated onions have not seen exponential growth. Manufacturers of dried onions are striving to capitalize on this untapped potential, primarily due to relatively low awareness of the benefits associated with consuming dehydrated onions. These efforts primarily target households through promotional campaigns.
To further support the industry, the government, in collaboration with the Agricultural and Processed Food Products Export Development Authority (APEDA), is anticipated to gradually increase its encouragement, with a focus on awareness and promotional activities. Moreover, manufacturers are placing greater emphasis on research and development to position dehydrated products as nutritious food items, tapping into the health-conscious consumer market. The majority of manufacturing enterprises are also expanding their export operations, trade networks, and production facilities, indicating a positive trajectory for the dried onion industry in India.
Scope of Onion Processing in India
Large Onion Production: India ranks among the top onion-producing nations globally, cultivating various onion varieties across different states. This abundance of onions serves as a solid foundation for extensive onion processing activities.
Diverse Product Range: Onions can be processed into a wide range of products, including onion powder, onion flakes, onion paste, dehydrated onion rings, pickled onions, onion puree, and more. Each of these processed products finds applications in the food industry.
Food Industry Demand: The Indian food processing industry is witnessing steady growth, driven by changing consumer preferences, urbanization, and an increasing demand for convenience foods. Processed onion products are integral to a variety of food items, from snacks and seasonings to ready-to-eat meals.
Catering to Diverse Markets: Processed onion products can cater to different market segments, from retail consumers to the foodservice industry, and from local to global markets.
While the scope for onion processing in India is promising, potential challenges like market fluctuations, price volatility, and competition need to be addressed. However, with proper planning, investment, and adherence to quality standards, onion processing can be a lucrative venture benefiting both farmers and the food industry.
Global Demand for Onions
Staple in Many Cuisines: Onions are a fundamental ingredient in the cuisines of numerous countries and regions, serving as a flavour base for various dishes.
Versatility: Onions can be used raw or cooked in a wide range of dishes, making them adaptable to different culinary applications.
Culinary Diversity: Onions are a key component in various global cuisines, contributing to their consistent demand.
Processed Onion Products: Processed onion products like onion powder, flakes, rings, and puree are essential for flavour enhancement and convenience in the food industry.
Healthy Attributes: Onions are recognized for their nutritional benefits, appealing to health-conscious consumers.
Global Trade: Onions are traded internationally, with major exporting countries playing a significant role in the global onion trade.
Processed Food Industry: The growth of the processed food industry has driven the demand for processed onion products, enhancing flavour and texture in convenience foods.
Year-round Availability: Advances in storage and transportation allow consistent onion supply throughout the year.
Cultural Significance: Onions hold cultural and culinary significance in many cultures, contributing to their demand.
Export Opportunities: Processed onion products, like dehydrated onions and onion powder, have extended shelf lives and are sought after in international markets.
While the demand for onions remains stable, it can be influenced by economic conditions, dietary trends, population growth, and consumer preferences. Onions are a vital commodity in global food supply chains, and fluctuations in supply and prices can occur due to agricultural factors, affecting regional supply and demand dynamics.
Emerging Trend in Onion Waste Processing
A substantial volume of onion waste, including skins, outer scales, roots, and undersized bulbs, is generated through domestic and industrial consumption. Innovations in onion waste utilization include:
Source of Fibre: Onion skins can be processed into dietary fibre supplements, enhancing texture and nutrition in various dishes.
Natural Colour: Extracted colour from onion skins is used as a natural dye, offering a sustainable alternative for colouring materials.
Flavorful Agent: Onion waste can yield onion essence, a flavourful agent for culinary applications.
Bio-gas Production: Anaerobic digestion of onion waste generates bio-gas, a renewable energy source.
Author - Dr. Prashant Pawar
Assistant Vice President-Business Development
Kan Biosys
Dr. Prashant Pawar is a seasoned Agribusiness professional with over 15 years of experience, known for his expertise in startups, HR, and strategic management. He holds academic achievements including a Ph.D. and actively contributes to the field through advisory roles and mentoring startups in the Agritech sector.
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