After Indonesia blacklisted 30 Indian vegetable oil importers last month, it is now India’s turn to react to Indonesian, Korean and Vietnamese oilmeal importers who have failed to open letters of credit (LCs) with local banks even after reaching consignments to their respective local ports.
In a circular to about 1,000 members, the Solvent Extractors’ Association (SEA), the apex body of edible oil producers, importers and traders in the country, has asked for relevant data including details of contracts, shipments among others to take up the issue with respective three governments through the Indian Missions.
Generally, LCs are opened before the goods are loaded on the ship for any destination. But, in some cases LCs are opened after the consignment reaches the local port under good customers’ faith and long term trade relationship.
“We understand from our members some overseas buyers have not opened the LCs due to banking problem or the fall in prices of oilmeals. Therefore, we have called for details of the relevant contracts data from our members to resolve the issues amicable,” said B V Mehta, executive director, SEA. Members have been asked to submit details latest by December 26, the circular reads.
Last month, Indonesia’s edible oil associations, including GAPKI, have blacklisted 30 Indian companies for defaults and have suggested that public-sector firms like MMTC, PEC and STC should not encourage these companies to import edible oil on their behalf.
| TUG OF WAR |
| * After Indonesia blacklisted 30 Indian veg oil importers, India is planning to do same with Indonesian, Vietnamese and Korean importers who have failed to open letters of credit with their local banks |
| * In a circular issued to its members, the SEA has asked for relevant data including details of contracts, shipments to take up the issue with the respective governments |
| * India is the biggest veg oil market for Indonesian exporters. According to industry sources, Indonesian traders came down heavily on GAPKI for raising the matter hurriedly, threatening their Indian business |
Initially, Indian importers dishonoured vegetable oils contracts to the tune of 1- 1.5 million tonnes which was almost settled through washing out (50:50 monetary compromise between supplier and importer), accepting contracts at the price the commodity was booked and through arbitration.
India is the biggest vegetable oil market for Indonesian exporters. According to industry sources, Indonesian traders came heavily on GAPKI for raising the matter hurriedly that has threatened their business with India. Indonesian exporters, of late have started fearing their loss in Indian business to their arch rival Malaysia.
