MUMBAI/NEW DELHI • India has informally asked palm oil refiners and traders to avoid buying the commodity from Malaysia, government and industry sources said yesterday, following Malaysian criticism of New Delhi's actions in the Kashmir region and its new citizenship law.
India is the world's biggest buyer of the oil and if Indian refiners reduce purchases from Malaysia, palm oil inventories there could spike, putting prices under pressure. Malaysian prices are the global benchmark for the commodity's prices.
A senior official in India's vegetable oil industry, who did not wish to be named, said the government had asked refiners at a meeting attended by two dozen vegetable oil industry officials in New Delhi on Monday to boycott Malaysia.
"In Monday's meeting, we have been verbally told to avoid buying Malaysian palm oil," the official said.
An Indian government official said: "We've had various rounds of meetings within the government and industry to see how we could reduce imports from Malaysia."
India has yet to firm up a plan of action and is exploring various options, the official added.
Malaysian Prime Minister Mahathir Mohamad has angered India over his comments on India's actions in Kashmir and over a new Indian citizenship law, which critics say chips away at India's secular foundations and could be used to discriminate against Muslims.
Last October, Indian traders stopped signing new contracts with Malaysia for a brief period, fearing India will raise import tax on Malaysian palm oil after Tun Dr Mahathir told the United Nations General Assembly that India had "invaded and occupied" Kashmir, a disputed Muslim-majority region also claimed by Pakistan.
Last month, Dr Mahathir also waded into the debate about India's new citizenship law, which has led to violent protests in India and at least 25 deaths in clashes with police.
"People are dying because of this law. So why is there a necessity to do this thing when all this while, for 70 years almost, they have lived together as citizens without any problem?" he said then.
Palm oil is crucial for Malaysia's economy as it accounts for 2.8 per cent of the country's gross domestic product and 4.5 per cent of total exports.