Onion is extremely important vegetable for earning foreign exchange grown in an area of 1.04 million hectares with a production of 15.74 million tonnes in the country during the year 2011-12. The world’s largest exporter India exported 15.53 lakh tonnes in the year 2011-12. Dehydration of onion has the potential to reduce the storage losses as well as in price stabilization. Gujarat state with 6 % share in area and 10 % share in production occupied third rank in area and production and first rank in productivity of the onion in 2011-12. The onion dehydration industry of the state is the biggest in the country and it comprises 80 % of the total dehydration units. This study explores processing cost, marketing cost and margin and employment generation in onion dehydration industry of Gujarat as well as growth of export of onion from India. The study based on primary data on processing and marketing cost collected from Junagadh and Bhavnagar district of Gujarat state and time series data on export of onion. It was found that the cultivation of onion is concentrated in the Saurashtra region of Gujarat. The area, production and productivity of onion crop increased at the rate of 9.53, 8.74 and 0.52 % annum, respectively during the period from 2001-02 to 2011-12. The cost of raw material in onion processing was found to be the major cost in total cost of processing. The net profit of ` 1931.64 per tonne of onion processing was realized by the processors. The processors got `1.15 per investment of one rupee while they recovered their total investment in 5.08 years. The processors preferred round shaped white onion having average diameter of 58 mm in order to obtain better quality of processed products. The export of dried onion and fresh onion from India increased at the rate 17.46 and 6.86 % per annum during 2001-02 to 2012-13, respectively. An appropriate export policy along with policy on fixing Minimum Export Price during glut season and efforts to minimize the variation in prices of onion in order to stabilize the area of the crop are the suggestions emerges from the study.