Indonesia to blacklist 30 Indian companies

In a move that could sully India’s image in the international market, top vegetable oil supplier, Indonesia, has accused 30 Indian companies, including Nafed, of taking it for a ride.

What’s worse, some of these defaulters are allegedly using public sector companies MMTC, PEC and STC to import oil on their behalf.

Indonesia has, therefore, asked the PSUs to stop “encouraging” these private players and blacklist them to avoid ending up with a similar payment problem. Nafed, a co-operative under the ministry of agriculture, has been importing vegetable oil on behalf of the government for supply through ration shops.

Indian importers are learnt to have been reluctant to pick up expensive cargoes after global palm oil prices crashed last month.

According to Indonesian industry, the list of Indian defaulters includes Nafed, JMD Oils and Fats, Bhatinda Oils and Fats, Kundan Oils and Fats, Raj Agro Oils, Gujarat Spices, Puneet and Company, Sarda Agro, Sudhir Agro, NCS Hyderabad, Mahesh Agro, Golden Oils Kolkata, Coastal Energy, Pradyhuman Overseas, Sara International, Dudhadhari Exports, DDI (Tower International), Budge Budge Refineries, Indumati Refineries, Shree Ganesh Oils, Velani Traders and Sheetal Industries.

In a strongly-worded letter last week to the Union commerce ministry and the Solvent Extractors Association, Indonesia’s leading industry associations, GAPKI and Indonesian Palm Oil Association, said they have decided to blacklist all defaulters, apart from taking individual legal action.

“Our members have informed us that in view of the recent downtrend in palm oil prices, several buyers from India have refused to honour their commitments. Some of the buyers have not opened line of credits and some have resorted to even denying existence of the contracts...We are surprised that the names include government agencies, including Nafed,” it said.

What has particularly peeved Indonesian industry is that India is not reciprocating its honourable behaviour last year. “Last year and early this year, when the market rallied higher and higher, all our members shipped out all the commitments sincerely. It is really worrying and disturbing that some Indian buyers have chosen to default when the markets start sliding,” GAPKI said. “... such unethical acts of non-performance of contracts will tarnish India’s image in the international market not only for palm oil but also for any other commodity for that matter.”

In a special note to the chiefs of MMTC, PEC and STC, the Indonesian industry has requested them to stop shielding defaulters by importing on their behalf. “We very strongly urge that your reputed organisations should not encourage these defaulters by way of importing for them. We understand that some of these buyers are already using your good offices to import,” GAPKI has stated.

For Indian PSUs, any such dent in their international image could be especially worrying because they are entrusted by the government with the task of importing important commodities such as vegetable oil, pulses, wheat and fertilisers.

Till now, Indian PSUs have been preferred to private companies because they are believed to always honour contracts and have ample liquidity. That enables them to contract best terms and prices overseas. If the private sector defaults start tarnishing their image in the international market, it is the Indian taxpayer who will have to pay the real price.

Source: EconomicTimes