India bans Malaysian palm oil as diplomatic rift widens
- The move appears to be retaliation for Malaysian Prime Minister Mahathir Mohamad’s recent comments on Kashmir and a new Indian citizenship law
- India is Malaysia’s biggest palm oil customer, importing US$1.3 billion worth in 2018 and accounting for 28 per cent of the latter’s palm oil exports last year
The ban, first revealed on Wednesday by The Edge Malaysia citing a government notification, came just a day after reports emerged that India was informally asking refiners and traders to avoid buying Malaysian palm oil.
India, the world’s top importer of palm oil, was Malaysia’s biggest customer last year, accounting for 28 per cent of its palm oil exports – more than double the previous year.
India had already raised taxes on refined palm oil from Malaysia for six months in September to 50 per cent from the previous 45 per cent as a safeguard against import spikes following a trade agreement that was signed between the two countries in early 2018.
“To support domestic refiners, Indian policymakers are looking to helping their refinery sector by using this non-tariff measure [of banning imports],” said independent political economist Khor Yu Leng.