India considers curbing Malaysian imports over Kashmir criticism

Malaysian PM Mahathir Mohamad told UN last month that India had ‘invaded and occupied’ Jammu and Kashmir.

Palm oil
Sources said the Indian government wants to send a strong signal of its displeasure to Malaysian authorities [File: Luis Echeverria/Reuters]

India is considering restricting imports of some products from Malaysia including palm oil, according to government and industry sources, in reaction to the Southeast Asian country’s leader criticising New Delhi for its actions in Indian-administered Kashmir.

India is looking for ways to limit palm oil imports and may place restrictions on other goods from the country, a government source and an industry source told Reuters news agency on Friday.

The sources – who asked not to be named as the proposal was still under discussion – had participated in discussions on the planned restrictions that were led by India’s Ministry of Commerce and Industry. 

India’s government was angered after Malaysian Prime Minister Mahathir Mohamad said last month at the United Nations that India had “invaded and occupied” Jammu and Kashmir and asked New Delhi to work with Pakistan to resolve the issue.

Muslim-majority Kashmir is divided between India and Pakistan. Both claim it in full but rule it in part, and the countries have twice gone to war over the territory. India revoked the special constitutional status of its portion of Kashmir in August, angering Pakistan.

The government wants to send a strong signal of its displeasure to Malaysian authorities, the sources said.

India, the world’s biggest importer of edible oils, is planning to substitute Malaysian palm oil with supplies of edible oils from countries such as Indonesia, Argentina and Ukraine, the sources said.

Palm oil accounts for nearly two-thirds of India’s total edible oil imports. India buys more than nine million tonnes of palm oil annually, mainly from Indonesia and Malaysia.

In the first nine months of 2019, India was the biggest buyer of Malaysian palm oil, purchasing 3.9 million tonnes, according to data compiled by the Malaysian Palm Oil Board.

A spokeswoman for India’s commerce ministry said the ministry could not comment on things that were under consideration.

Alternative sellers

Malaysia’s prime minister on Friday said he had not received “anything official” from India, after Reuters first reported that India was considering restricting imports of Malaysian palm oil and other products.

The news prompted Malaysian palm oil futures to snap five days of gains and end lower on Friday evening.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange – which had earlier been trading up on the day – fell 0.9 percent to close at 2,185 ringgit ($522.23) per tonne.

A Mumbai-based refiner said it would not create a shortage of edible oils in India if buyers there stopped importing palm oil from Malaysia.

“Indonesia is eager to sell more and more palm oil to India,” the refiner said, adding that India could also increase imports of soya bean oil from Argentina and sunflower oil from Ukraine to offset any drop in Malaysian palm oil shipments.

Indonesia wants New Delhi to increase palm oil purchases and wants to buy sugar from India in exchange.

Higher Indian imports had helped Malaysia reduce palm oil stockpiles in 2019, but stocks could rise again and prices could come under pressure if India curtails or stops imports, a Mumbai-based dealer with a global trading firm said.

India’s government is also planning some restrictions on imports from Turkey, one of the government sources said, as Ankara has issued repeated statements on Kashmir, an issue that India considers an internal matter.

In addition to tensions around Indian-administered Kashmir, there has also been friction between India and Malaysia over Islamic preacher Zakir Naik, whom Indian authorities want to be extradited from Malaysia.

In 2016, an Indian counterterrorism agency accused Naik of promoting hate speech.

Source: Reuters