Why in news?
- Indian buyers have resumed purchases of Malaysian palm oil after a four-month gap following a diplomatic row, with buying spurred by a fall in domestic inventories and discounted prices.
- The renewed purchases come amid improving trade relations between the two countries after the formation of a new government in Kuala Lumpur.
- Malaysia signed a deal last in the 4th week of May to buy a record 1,00,000 tonnes of Indian rice, and Indian importers contracted up to 2,00,000 tonnes of crude palm oil from Malaysia.
Why had India restricted import of Palm oil from Malaysia?
- The move is widely viewed as a retaliation against Malaysian Prime Minister who had criticised India’s internal policy decision of passing the Citizenship Amendment Act.
- Since 2017, Malaysia has also been sheltering the Islamic preacher Zakir Naik, who is wanted by India on charges of money laundering, hate speech, and links to terror.
- Indonesia and Malaysia together produce 85% of the world’s palm oil, and India is among the biggest buyers.
- The then Malaysian PM had said that “Malaysia cannot retaliate against India because it is too small”, and since India restricted Palm Oil imports, which was its largest market, it lead to fall in Malaysian palm oil futures.
-Source: Times of India