Is it correct to say 'There is an onion'?

Answer

Yes, if the context is something like this: '-What is in that bag?' '-There is an onion.' But if the context is: '-What is that on the table?' then the answer should be '-It is an onion.'

There is an onion sounds odd on its own. If one adds a place it is correct, as in There is an onion on the kitchen table.