India Begins Buying Malaysia Palm Oil As Bilateral Relations Improve; Importers Cash In On Discounts
New prime minister in Kuala Lumpur, Muhyiddin Yassin, has extended an olive branch to restore relations with India.
Malaysia has also stepped up its purchase of sugar and rice from India.
Indian vegetable oil importers have resumed buying crude palm oil from Malaysia, for the first time since January, when bilateral relations between both the countries were affected due to Kuala Lumpur’s comments on New Delhi’s internal affairs.
Solvent Extractors Association of India Executive Director, B V Mehta, confirmed the purchases by India while speaking to Swarajya, saying that it would not be good for the country to depend solely on one supplier - Indonesia.
“Indonesia has been good and met our demand. But we cannot be depending on just one source,” he said.
The global wire agency reported that two lakh tonnes of crude palm oil have been contracted for imports in June and July. It quoted traders as saying that the purchases were made as stocks in ports had dropped.
The purchases have been made as Malaysian sellers are offering a $15 per tonne discount compared with the prices quoted by Indonesia. It comes on the heels of Indonesia increasing export tax on palm oil by an additional $5 a tonne.
The development comes in the wake of improved relations between Malaysia and India, particularly after the ouster of Mahathir Mohamad in the South-East Asian nation.
New prime minister Muhyiddin Yassin has extended an olive branch to restore the relations. Malaysia has also stepped up its purchase of sugar and rice from India, a further sign of extending its hands of friendship.
Mehta said since importers were buying crude palm oil they would not require Government’s permission.
In February this year, the Centre brought import of refined oils under the restricted list. This implied that importers need to seek licenses from the Directorate-General of Foreign Trade to ship the commodity into the country.
Malaysia has signed contracts to import a record one lakh tonnes of rice from India this month and next - double the average quantity of rice that it buys from India every year.
Malaysia has also begun to buy more quantities of sugar from India of late.
Bitter over Mahathir’s criticism of the Citizenship Amendment Act, the abrogation of Article 370 in Kashmir and his refusal to repatriate controversial Islamic preacher Zakir Naik, Indian officials informally asked edible oil importers to stop purchasing from Malaysia until January end.
India imports 15 million tonnes of vegetable oils every year with palm group of oils making up nine million tonnes. Last year, palm oil from Malaysia accounted for 4.4 million tonnes.
In view of India's trade curbs on Malaysian palm oil, its shipments have halved between January and March.
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