Ban on vegoil traders at Kandla delayed.

New Delhi: India’s customs authorities have delayed a decision to bar traders from buying and selling vegetable oils headed for Kandla port, the main hub for palm oil imports in the world’s top buyer of edible oils.

The move had rattled traders at Kandla, through which more than a third of India’s total edible oils imports passed in June, because the customs order sought stronger documentation of consignments in an effort to widen the tax net.

Earlier, the government had allowed high-seas sales, in which the original importer sells the goods to another buyer before the cargo reaches Kandla so as to shield the consignment from local taxes applicable on sales in India.

Palm oil imports would have fallen a third had this order been implemented, said a trader from the western port, India’s fourth biggest by revenue, and which receives about 200,000 tonne of palm oil a month.

Customs officials said traders were violating certain rules but traders said a complete ban on their activity was a drastic step which would have strengthened certain large importers and reduced liquidity in the market.

The issue was resolved after a meeting between traders and customs officials on Wednesday, officials said.

We have kept in abeyance the order related to the high seas sales, a senior customs official, who did not want to be identified, said.

The decision cheered industry officials. We welcome this move, said Sanjeev Garg, director (commercial) at LMJ International, a leading commodities trading firm in New Delhi.

Traders said that if the order had been implemented, it would have obstructed palm oil imports, putting pressure on the benchmark price at the Bursa Malaysia Derivatives Exchange.

The benchmark October contract on Bursa Malaysia’s Derivatives Exchange rose 28 ringgit to 2,485 ringgit ($772) a tonne on Thursday, after hitting 2,497 ringgit a tonne, a level that was last touched on May 24.

At Kandla, small traders besides actual users and refiners bought and sold imported vegetable oils while consignments were still on the high seas.

Customs authorities have decided not to implement an order aimed at restricting traders’ involvement in high seas sale, said a shipping agent from Kandla.

Last month, the western port received 254,578 tonne of cooking oil, up 62% from 157,335 tonne in May, according to the latest updates of trade body the Solvent Extractors’ Association of India.

Source : financialexpress.com