Edible oil importers advised to refrain from palm oil import from Malaysia

Sources said India is looking for options to reduce import from Malaysia in a retaliatory action against PM Mahathir Bin Mohamad's recent call in the UN on India's abrogation of Article 370 in J&K

The edible oil industry has been advised to refrain from import of crude and refined palm oil from Malaysia amid strained relations between the two countries after latter's stand on abrogation of Article 370 in Jammu & Kashmir.

The industry body fears possible levy of import duty that may result in trapping of consignment in transit.

In an advisory to its nearly 1000 members, almost all leading players in the edible oil industry, the Solvent Extractors’ Association (SEA) has suggested to refrain import of edible oil from Malaysia.

“The recent developments pertaining to strained relations between our nation and Malaysia have put a lot of responsibility on our industry in view of huge imports of palm oil from that country. In your own interest as well as a mark of solidarity with our nation, we should avoid purchases from Malaysia for the time being,” said Atul Chaturvedi, President, SEA.

Sources said India is looking for options to reduce import from Malaysia in a retaliatory action against Prime Minister Mahathir Bin Mohamad’s recent call in the United Nations on India’s abrogation of Article 370 in Jammu & Kashmir (J&K). Mohamad termed it as “invaded and occupied” and asked New Delhi to work with Pakistan to resolve the issue.

Also, the Malaysian prime minister later said, “There may be reasons for India’s action in J&K but, it is still wrong.”

Malaysia’s support to Pakistan was strongly protested by Indian authorities. Apart from Malaysia, China and Turkey also supported Pakistan in the United Nations without uttering a word on India’s ‘terrorism’ issue.

India has imported around 5 million tonnes of CPO and RBD (refined, bleached and deodorized) or refined olein from Malaysia between November 2018 and August 2019 to meet its requirement. India’s import of palm oil from Malaysia contributes nearly 33 per cent of India’s total annual demand.

India’s import of crude oil jumped significantly between November ’18 and August ’19 due to 5 per cent duty differential in favour of Malaysia. But, India imposed 5 per cent of safeguard duty to restrict import.

“Our government has not taken kindly to the unprovoked pronouncements by the Malaysian Prime Minister and is contemplating some retaliatory action. It would be in fitness of things, as responsible Indian vegetable oil industry, we avoid purchasing of palm oil from Malaysia till such time clarity on the way forward emerges from Indian government. We don’t want our members to get trapped for the goods in transit,” said Chaturvedi.

Transportation of crude oil consignments from Malaysia to India takes around 10 days. It is, however, unclear whether India is looking to increase import from alternative countries like Indonesia and Argentina.

According to trade sources, Malaysian government has offered to import sugar from India. But, the trade tensions are intensifying between two countries, sources added.

Malaysia is also facing trade related issues with other Asian countries due to the US-China trade war.