"There have been defaults by Indian buyers as people who had committed to purchase are simply not taking delivery of the goods," said one senior official of a leading multinational edible oil importing firm.

"There is too much oil in the local market and tumbling world prices are inflicting more damage on the industry."

India's edible oil imports are divided equally among palmolein from Malaysia and soft oils like soya and sunflower from Argentina, Brazil and the United States.

Imports surged to 1.8 million tonnes in the first seven months of 1998/99 (November-October) compared with 5,70,409 tonnes in the year-ago period.

"Local problems are aggravating the situation. Buyers who cannot bear the losses are not lifting the goods," said Navinchandra Shah, president of the Bombay Oilseeds & Oils Exchange (BOOE).

Domesticimporters were earlier seeking deferred shipments from Malaysian and Latin American sellers. Local importers said large quantities of edible oil stocks had built up in the past few weeks due to a slump in offtake.

"All price levels have ceased to be the bottom levels," said BV Mehta, executive director of the Solvent Extractors' Association of India (SEAI).

Prices of palmolein and soft oils in CIF terms have crashed between 35 to 50 per cent in the last 10 months, industry officials said. Worldwide vegetable oil prices have been reeling amidst over-supply, with no support levels seen. Earlier this week, Chicago soy oils hit 12-year lows while Malaysian palm oil prices were at a two-year low.

Indian traders said the worldwide fall in prices, coupled with a slack in local demand and a difficult payment position, was seen stemming imports in the next few months.

"There are very few new commitments being made by importers. Shipments for earlier contracts will mostly be completed by July-end," one localtrader said.

India normally imports edible oils to bridge the shortfall in local oilseeds production, but imports have shot up this year following a cut in import duties and as farmers held back stocks due to depressed prices.