India palm import curbs to start Malaysia price war

Following Malaysia's repeated criticism of India's decision to withdraw the special status of Kashmir, the Centre has put restrictions on the import of palm oil from the South Asian country, arguing that cordial bilateral links are essential for business decisions.

“The status of relationship between two countries is important. It is a factor in any business decision. We told them to keep the sensitivities in mind on some of these topics (read Article 370 and Kashmir). At some stage they would realise those were not the appropriate things to do,” Raveesh Kumar, Ministry of External Affairs spokesperson said here on Thursday.

Kumar's remarks come in the wake of a notification from the Directorate General of Foreign Trade under the Union Commerce Ministry putting palm oil under the restricted list of items that can be imported to India.

According to the Palm Oil Refiners Association of Malaysia, Malaysia would now have to compete on crude palm sales to India, where Indonesia has traditionally been more cost-competitive.

Even though the Muslim-majority country supplies 28% of India's palm oil in 2018 securing business worth $ 1.3 billion, its 94-year old Prime Minister Mahathir Mohamad remained one of the most outspoken critic of New Delhi's decision to revoke Article 370 to strip Kashmir of its special status.

The move comes at a time when 15 envoys are on a two-day tour to the northern state meeting local politicians, civil society members, security agencies and local media. The Ambassadors of USA, South Korea, Vietnam, Bangladesh, Fiji, Maldives, Morocco, Peru, Argentina, Togo, Niger, Norway, Philippines, Nigeria and Guyana were in Srinagar and would travel to Jammu on Friday where they would also meet the locals.

Asked on the absence of EU diplomats, Kumar downplayed the issue and hinted at similar subsequent tours in future to provide opportunities to diplomats from other countries to visit the trouble-torn state.

“The objective was to provide them with an opportunity to witness the government's efforts to normalise the situation since the revocation of Article 370 in August,” he said.

On the palm oil import, sources said DGFT gave import license under three categories – open, restricted and prohibited. While government is not involved for items in the first category, an importer seeking to bring in a restricted category item, would have to approach the DGFT seeking permission.

The same rule would also apply to other palm oil suppliers like Indonesia and Nepal, who too are jittery at the moment on the ramification of the government decision.