The move comes after Premier Manmohan Singh expressed "deep concern" over the cost of onions doubling in a matter of days and called for steps to lower prices of what is normally one of the cheapest vegetables.

Onions are selling for 80 rupees a kilogramme (88 cents a pound) after a price surge from 35 to 40 rupees, and stories about the increase have become front-page news.

Indian authorities are mindful that onions can be a potent political issue, with voters in 1998 throwing out the Hindu nationalist Bharatiya Janata Party (BJP) in Delhi state polls after a sharp surge in onion prices.

The so-called "onion factor" also helped defeat the left-leaning, now defunct Janata Party in 1980 parliamentary elections when prices went up quickly.

The government, which is battling to curb inflation, has already banned the export of onions but has warned prices will stay high for several weeks due to unseasonal rains in western India's onion-growing region.

Authorities also say traders hoarding onions are driving up prices and starting to make the vegetable unaffordable for India's poor, who use it as an essential ingredient to add taste to food.

Onions are being trucked in from neighbouring Pakistan, where they cost a fifth of the price, in a bid to meet domestic demand.

"The customs duty on onions has been brought down to zero," Finance Secretary Ashok Chawla told reporters in New Delhi.

The government has also asked state-run cooperative stores to sell onions at wholesale rates of 35 to 40 rupees a kilogramme to cool prices.

The spike in onion prices comes as overall food inflation runs at nearly 10 percent, causing huge hardship for India's impoverished millions.

The government has been feeling the heat over inflation as the opposition BJP has seized on the issue to galvanise its fortunes.