The Indian government has banned the import of refined palm oil and palmolein from Malaysia. News agency Reuters quoted sources as saying that the move was taken by Malaysia in response to the Modi government's criticism on Kashmir and the Citizenship Act (CAA). However, crude palm oil (CPO) imports will continue from Malaysia.
The Ministry of Commerce and Industry on Wednesday issued a notification saying that the export of refined palm oil from Malaysia has been shifted from 'Free' to 'Restricted' category. Reuters quoted sources as saying that the order is a complete ban on the export of refined oil from Malaysia. This will cause heavy damage to Malaysia.
Malaysia is currently the main supplier of refined palm oil and palmoline in India. Indonesia will be the biggest beneficiary of the ban on imports from Malaysia, which is the largest supplier of crude palm oil in India. Palmolin is used as a cooking oil.
Significantly, Malaysia's Prime Minister Mahathir Mohammad recently criticized the policies of the Indian government regarding Kashmir and CAA. Mahathir had said in October last year that India had 'captured' Kashmir. On the occasion of the protests against the new Nagrittaka Act (CAA) in December, he said that the Indian government was promoting unrest.
The Indian government had this week informally advised palm oil refiners and traders to refrain from purchasing palm oil from Malaysia.
Indian government will be happy with this move of the government as it will increase the business of Indian vegetable oil refiners. Immediately after this notification, the price of Indian crude palm oil, soybean oil and mustard oil has increased.
Experts say that this will cause great harm to Malaysia. Indonesia was the largest supplier of palm oil in India, but Malaysia reduced it to tax on refined palm oil and became the largest supplier in 2019. How important palm oil business is for Malaysia can be understood only by the fact that it accounts for 2.5 per cent of the GDP there and 4.5 per cent of the total exports.
Palm oil accounts for about two-thirds of India's total edible oil business. India imports about 9 million tonnes of palm oil every year.
