The government took the decision on Wednesday in a bid to “protect the interests of farmers”, The Times of India reported citing state news agency Press Trust of India.
“Prices are likely to fall sharply due to bumper rabi (winter) crop,” it said.
Citing sources, the news agency said the decision was taken at a meeting of a group of ministers headed by Home Minister Amit Shah.
The sources also told PTI that the government also deliberated on whether to reduce or scrap the minimum export price of onion to facilitate outbound shipments.
"Since the price of onion has stabilised and there is bumper onion crop, government has decided to lift ban on export of onions,” Food Minister Ram Vilas Paswan said in a Twitter post.
Expected monthly harvest in March is over 4 million tonnes compared to 2.84 million tonnes last year, according to him.
The decision to lift the ban will be effective once the Directorate General of Foreign Trade issues a notification, the report said.
In Bangladesh, the prices of the key kitchen ingredient shot through the roof in 2019 after rains and floods hurt the yield and the Indian government embargoed its exports.
The prices went as high as an unprecedented Tk 250 per kg in the market.
The price increased when on Sept 13, India doubled the export price to $850 per tonne.
Later, it stopped exporting onion altogether in a move that destabilised the local market.
The government increased the import of onion from Myanmar and dragged down the price to Tk 100 per kg by the end of October.
The price skyrocketed to Tk 250 per kg creating a new record when Cyclone Bulbul hit the country.
Onion prices began to drop in the second week of December when it was imported from different countries. The price ranged from Tk 70 to 100 by the end of the year.