Modi govt curbs exports from southeast nations, Malaysia to buy more Indian sugar

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After Malaysian Prime Minister Mahathir Mohamad’s criticism of India’s domestic issues like CAA, the Modi government has set into motion an exercise which may bring more curbs on exports from the southeast nation.

The cabinet secretariat has already written to the Ministry of Commerce seeking “trade remedial action against restrictive trade practices of Malaysia”. Kuala Lumpur’s refusal to revoke permanent resident status for controversial Islamic preacher Zakir Naik has also affected India’s attitude towards the nation. Media accessed the directive sent by the cabinet secretariat to look into the scope for enforcing restrictions on a large number of major imports from Malaysia. This includes Petroleum crude, refined palm oil, crude palm oil, copper and aluminium wire, microprocessors and other computer and telecom products, turbojets, aluminium ingots, LNG etc.

The government had kick started imposing restrictions by bringing limiting import of palm oil from Malaysia, thus altering the trade relationship between the world’s biggest edible oil buyer – India, and the key supplier – Malaysia. India had imported 4.4 million tonnes of palm oil from Malaysia in 2018-19.

The decision also has a ‘Make in India’ connection. The government claims that the restrictions will also boost business for Indian refiners of crude palm oil. India is one of the world’s largest vegetable oil consumers with an average Indian consuming over 20 kg of vegetable oil a year.

If India goes ahead with imposing restrictions, it would create a big setback for Malaysia as all the above items make up almost $11 billion worth exports to India in 2018-19 and almost $7 billion in April 2019-20. There was a growth of 20.1 per cent in 2018-19. In contrast, India’s export to Malaysia was at 6.4 billion in 2018-19 and $4 billion in April to November 2019.

Malaysia’s top sugar refiner said it will increase purchases of the commodity from India, which according to two sources is part of efforts to placate New Delhi amid an ongoing spat over palm oil imports.

MSM Malaysia Holdings Berhad will buy 130,000 tonnes of raw sugar from India worth 200 million ringgit ($49.2 million) in the first quarter, the company said. It bought around 88,000 tonnes of raw sugar from India in 2019.

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