Palm oil imports from Malaysia forbidden by India

India has banned the imports of refined palm oil and palm olein earlier this week. This move came as a retaliation against top supplier Malaysia, after its criticism of Indian actions in Kashmir and new citizenship law. The Indian Ministry of Commerce and Industry issued a notification declaring the import of refined palm oil “is amended from Free to Restricted”. Indian crude palm oil, soya oil, soya bean and rapeseed prices jumped after the announcement.

Crux of the Matter

1. Industry Sources said Prime Minister Narendra Modi‘s government is seeking to teach Malaysia a lesson after it’s Prime Minister Mahathir Mohamad criticised New Delhi.

2. Mahathir said in October that India “invaded and occupied” Kashmir, a disputed Muslim-majority region also claimed by Pakistan. And last month, he said India was stoking unrest with its new citizenship law, which critics say undermines the country’s secular foundations.

3. Palm oil is crucial for the Malaysian economy as it accounts for 2.8 % of gross domestic product and 4.5% of total exports. State-owned and private Malaysian refineries will likely have to scramble to find new buyers for their refined product.

4. Internationally, this prohibition may hit Malaysia but will help Indonesia, the biggest exporter of crude palm oil.

5. Palm olein is a liquid form of palm oil used in cooking. Back at home, the decision is likely to boost business for Indian refiners of the vegetable oil.

Curiopedia

India’s main imports are mineral fuels, oils and waxes and bituminous substances (27 % of total imports); pearls, precious and semi-precious stones and jewellery (14 %); electrical machinery and equipment (10 %); nuclear reactors, boilers, machinery and mechanical appliances (8 %); and organic chemicals (4 %). The nation’s major import partners are China (16 % of total imports), the United States (6 %), United Arab Emirates (6 %), Saudi Arabia (5 %) and Switzerland (5 %). India imported US$507.6 billion worth of goods from around the globe in 2018, up by 10.5% since 2014 and up by 14.3% from 2017 to 2018. More Info

Curated Coverage

1. The Straits Times – Malaysia hit as India restricts imports of palm oil

2. The Hindu – Nepal expresses concern after India places a restriction on palm oil import targeting Malaysia

3. The Wire – Palm Oil Imports: India Warns Malaysia That Bilateral Ties Are ‘Factored’ in Trade Transactions

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