After a hazardous chemical product has been found, Beijing has halted imports of oilmeals from India, threatening about half India's rapeseed exports and potentially cutting its overall feedstock sales to China by over 10%, an Indian trade body said.

 

China said in June it had found traces of malachite green in shipments from the south Asian nation and from Malaysia and had warned it would return or destroy shipments found with traces of the carcinogenic dye.

 

"For the time being, China has suspended imports of oilmeals from India," B.V. Mehta, executive director at the Solvent Extractors' Association of India (SEA), said Monday.

 

The restrictions, which took effect on January 1, are likely to hit India's total oilmeal exports, the association said.

 

"This is a very serious development which will affect the exports of oilmeals badly since China is a big market for India," the association said in a statement.

 

The origin of the contamination is a green dye used for marking jute bags, the association said. Exporters have been asked not to use the bags, it added. A Chinese inspection team is likely to visit India in March to gauge measures taken by India, Mehta said, adding he hoped the suspension would be revoked soon due to China's huge appetite for animal feed stocks.

 

In 2010/11, China bought 536,604 tonnes of oilmeals from India, sharing nearly 11% of the country's total oilmeal exports of 5.1 million tonnes, data of the trade body showed.

 

India's rapeseed meal exports to China in the year to March 2011 were worth about INR6-7 billion (US$120-140 million) and it is the biggest supplier of the animal feed to China after Canada.

 

China annually imports 1.2-1.4 million tonnes of rapeseed meal in total. Other suppliers include the US and Pakistan.

 

"This issue has already reduced our oilmeal exports to China in the past few months," a Mumbai-based trader said.

 

In December, China imported 41,729 tonnes of oilmeal from India, down from 65,428 tonnes in the same month a year earlier. Imports from India included 30,196 tonnes of soymeal and 11,533 tonnes of rapeseed meal.