India has clamped down on refined palm oil imports, and the blow lands hardest on Malaysia, the supplier that fills most of that demand. The trade tussle is already rippling through the mills, ports and farming communities that live off the commodity.
The mechanics are simple. On Wednesday the commerce ministry moved refined palm oil and palmolein from “Free” to “Restricted.” Four industry sources told Reuters the change is, in practice, a ban: India can now bring in only crude palm oil.
The consequences are uneven. Malaysia, which ships India most of its refined palm oil, will have to find new buyers for its state-owned and private refineries. Indonesia, the biggest crude exporter, stands to gain. For Malaysia the stakes are large: palm oil is worth 2.8 percent of GDP and 4.5 percent of exports.
Inside India, the winners are local refiners. B.V. Mehta of the Solvent Extractors’ Association said Indian refiners had been “struggling for survival,” and argued the restriction would help refiners, farmers and job creation. Palm oil is nearly two-thirds of India’s edible oil imports, at more than 9 million tonnes a year.
The trigger is politics, not price. Malaysian Prime Minister Mahathir Mohamad has criticised India over Kashmir and a new citizenship law, and New Delhi had already, quietly, told traders to avoid Malaysian palm oil. For families across the region, the lesson is an old one: what happens between two governments shows up, eventually, in the market stall and the mill.
Sources
- India restricts refined palm oil imports after Malaysia's criticism of Modi | Reuters
- Malaysia hit as India restricts imports of palm oil | The Straits Times
