"We have asked exporters to be cautious while entering into export deals with Chinese traders since loc worth more than Rs 30 crore are yet to be honoured," joint secretary, ministry of commerce RP Aggarwal said.

He said the amount due to Indian exporters could be more as not many exporters were willing to disclose the amount and seek government help.

The issue of loc not being honoured cropped up after the Chinese market was hit by a demand recession and traders not being able to realise anticipated margins, Aggarwal said.

"The demand recession in China and the reluctance of exporters to ship more to Beijing hit the exporters, which has fallen by nearly 50 per cent during April-October this year," he said.

Exports of marine products to China during April-October this year had declined to 30,575 tonnes from 59,647 tonnes exported during the corresponding period last year.

In value terms exports declined to $35.89 million during the period from a robust 70.80 million dollars a year ago.

The government had already taken up the matter with the Chinese embassy and a senior official of the Marine Products' Export Promotion Council (MPEDA) had visited China and held talks with authorities to solve the issue amicably.

However, industry sources said, chances of the exporters getting their loc honoured were bleak as most of the deals did not have legal provisions to force arbitration.

"As most of the deals were more of a businessmen to businessmen level chances are that Indian exporters would have to suffer losses and refrain from entering into similar contracts," they said.

Chinese authorities had made it clear that only those loc could be honoured, which had a provision or clause in the purchase agreement for legal arbitration, Aggarwal said.

"LoC with provision for court procedures could be settled through Chinese International Economic and Trade Arbitration Council (CIETAC)," he said.

As a precautionary measure to prevent recurrence of such incidents, the commerce ministry had asked exporters to enter into deals through some of the reputed banks operating in the country, he said.

The exporters' move to enter into direct deals with Chinese buyers and not go through the traders in Hong Kong had also led to a decline in exports to Hong Kong, which fell to just 20 million dollars in April-October from 70 million dollars recorded during the same period last year.