The dynamics between key players in the palm oil industry will fundamentally shift unless a diplomatic spat between India and Malaysia can be resolved amicably, experts warn.<\/p>\n
India \u2013 the world\u2019s largest importer of palm oil and a major market for Malaysia \u2013 has started a trade war after taking strong exception to comments<\/a> by the Malaysian prime minister, Mahathir Mohamad.<\/p>\n Late last year, the Malaysian leader condemned the Indian federal government\u2019s move to revoke constitutional provisions that conferred special status to Jammu and Kashmir, the country\u2019s only Muslim majority state. He subsequently criticised India\u2019s new citizenship law as discriminatory to Muslims. The Indian government views these as internal matters.<\/p>\n India has tended to import most of its refined palm oil from Malaysia and crude palm oil from Indonesia. On 8 January, India\u2019s director general of foreign trade restricted<\/a> imports of the refined oil, with the government to issue import licences. Industry insiders say this amounts to a ban.<\/p>\n India hasn\u2019t made any public statements linking the restrictions to Mahathir Mohamad\u2019s comments. But an Indian trade ministry official told China Dialogue that the restrictions will continue unless Malaysia stops commenting on India\u2019s internal affairs. \u201cWe might add other items [besides refined palm oil] to the restricted list,\u201d he said, on condition of anonymity.<\/p>\n Even before the trade restrictions, the Indian government had in October last year informally asked edible oil importers not to buy Malaysian palm oil in any form, an industry executive said. \u201cPalm oil imports from Malaysia have been declining drastically since then,\u201d he told China Dialogue. \u201cAll importers have been replacing Malaysian palm oil imports by buying more from Indonesia,\u201d he said, declining to be named.<\/p>\n Malaysia\u2019s palm oil shipments to India have indeed seen a precipitous fall in the past couple of months, according to data<\/a> released by the Malaysian Palm Oil Board. This decline could have severe repercussions in the Southeast Asian country, as exports of palm oil to India had surged in recent times<\/a>.<\/p>\nFall in imports<\/h2>\n
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