02/11/2008 (The Hindu Business Line), Mumbai - Angered by large-scale defaults committed by Indian importers including some well-known corporates and State agencies, a group of overseas suppliers of edible oil has decided to move the Indian Government for action against the alleged defaulters.

Fair trade practices
Four major edible oil exporters from Indonesia have got together to, what they say, fight for justice and enforce fair trade practices, a representative of an Indonesian supplier, who, did not wish to be identified told Business Line.

This group, he said, will make the names of defaulting Indian parties public if they do not honour their commitment and may blacklist them for future business.

Some of the Indian defaulters, it is learnt, are shying away from doing business directly with the Indonesian suppliers and are now said to be going through State agencies such as STC.

Not to encourage defaulters
The Indonesian suppliers group now wants to prevail upon the State agencies not to encourage the defaulting Indian importers.

“Some Indian buyers have failed to open letters of credit according to the contract, while some daring ones are even denying existence of a contract”, the overseas supplier lamented.

Arbitration proceedings against Indian defaulters are expected to be initiated soon.

Indian parties have been unwilling to honour the commitment as it would have meant import of high priced goods in a falling market, resulting huge losses.

However, Indonesian suppliers, say, such price changes are part of any business deal in a known volatile market.

Although Malaysia is the world’s largest exporter, Indonesia dominates palm oil supplies to India.

Despite passage of two months from the time prices crashed and defaults started, there has been no meeting ground between Indian buyers and overseas sellers.

Vegetable oil imports are unrestricted and there is no monitoring of the business by any agency.

Huge volatility in the market encourages sharp business practices.

Between August and September, world vegetable oil market collapsed under the combined influence of rising production, falling energy prices and firming dollar, with palm and soya oils losing 50-60 per cent of the value from their peak levels.