Indian Drug Manufacturers' Association chairman (public relations committee) and chairman of the co-ordination committee at the Association of Small and Medium Chemical Manufacturers, KD Vora said that several leading importers who had imported chemicals and pharmaceuticals worth several crores of rupees from Chinese suppliers have been cheated. Total imports from China in 1998 have been valued at $1,016.6 million.

"Indian importers who ordered materials like dicyandiamide 99 per cent, borax, sodium nitrite etc have, to their horror, found material like globbar salt which have absolutely no commercial value. The value of such consignments is approximately $2,50,000," he said.

Moreover, since such imports are mostly done on sight letter of credit basis (that is, payment against documents or on advance paymentbasis), the importers are left helpless, once they discover the fraud.

Affected parties include Basal Impex (with imports of fake material instead of 20 M Tonnes of dicyandiamide of CIF value of $24,400), Kwality Agro Vet Industries and Ankush Enterprise (with imports of 17 MTs of dicyandiamide 99 per cent). In the case of Kwality Agro Vet Industries, primary testing of the material in the first week of March indicated that the consignment did not contain dicyandiamide. Imports of dicyandiamide from China command a price of around $1,200 per tonne against international prices of $2,000 per tonne.

Significantly, United Phosphorus which had opened a letter of credit (LC) for Rs 2.5 crores in 1996 was allegedly cheated when fraudulent documents including a bill of lading was negotiated against the LC and no material was shipped. The consignor in this case was Hunan Leadar International Trade General Corporation based in Changsha in China.

Complaints have been lodged with police authorities to conduct ajoint examination of the cargo in the presence of customs authorities, the shipping company and independent surveyors. The industry associations are also contemplating legal action against these Chinese exporters.

Supplies from China essentially come from government corporations like the Yantai Import & Export Corporation, China Arts Hangzhou Import Export Corporation, CAC (Shanghai) International Trading Co, Henan Xuchang Foreign Trade Corporation etc.