New Delhi: Restrictions on imports of refined palm oil and palmolein are a new weapon in Prime Minister Narendra Modi’s foreign policy. It is the first time use of trade as a carrot-and-stick lever to foster New Delhi’s foreign policy objectives.
In his style, Modi has conveyed to Malaysian Prime Minister Mahathir Bin Mohamad that his statements against India’s policies including on Jammu and Kashmir, will come with a heavy price.
After all, Malaysia is the world’s second-largest producer and exporter of palm oil after Indonesia. Now, it stands to lose crores of rupees worth of business from India. It is the largest exporter of refined palm oil and palmolein to India.
Modi’s new approach also means that Indonesia gains as the biggest exporter of crude palm oil to Indian refineries of the vegetable oil. Until a few years ago, Indonesia used to dominate two-thirds of India's palm oil imports. Lower duty on refined palm oil helped Malaysia in a big way a year ago.
Unlike Malaysia, Indonesia has chosen to be wise and circumspect on New Delhi’s domestic policies despite the fact it has the world’s largest Muslim population.
Interestingly, Malaysia is not named in the notification issued by the Ministry of Commerce but its wordings are clear. The import of refined palm oil is shown amended from 'Free' to ‘Restricted' category.
So far, India has been allowing imports refined bleached deodorised palm oil and palmolein from Malaysia —without any specific licence.
Why is Modi upset with Mahathir?
Since he assumed office, Malaysian Prime Minister Mahathir Mohamad has sought to emerge as the voice of Muslims all over the world.
Last year, Mahathir criticised India that it had 'invaded and occupied' Kashmir when the Modi government passed legislation revoking special status for Jammu and Kashmir by making Article 370 inoperative. Mahathir also questioned the new Citizenship Amendment Act.
His comments were strongly refuted by the Ministry of External Affairs after Modi expressed displeasure. Since then Modi has been unhappy with Mahathir. The Malaysian government had also refused to extradite controversial Islamic preacher Zakir Naik to India.
Under Mahathir’s predecessor, Najib Razak, Malaysia received a lot of attention from Modi’s 'Look East' policy. But when the Pakatan Harapan government came to power in the election held in May 2018, things have begun to turn sour.
Mahathir returned as PM after a gap of 15 years vowing to change Malaysian foreign policy to increase its standing. His desire for pre-eminence in the Muslim world saw increased engagement with Pakistan, which upset New Delhi.
Will Mahathir bow before Modi’s pressure tactics because of economic implications for his country’s palm oil producers? This is unlikely since Mahathir sees Malaysia's support for Muslims in India as a moral issue. But can Malaysia watch helplessly when Indonesia gains at its expense?
Mahathir is already facing intense pressure from the Western countries to curb the palm oil trade because of tremendous environmental devastation and often with attendant labour and human rights abuses.
On the other hand, the Indian government is not worried about the impact on rising edible oil prices in the country because of the unstated ban on import of refined palm oil from Malaysia.
Indian oil refiners are happy their business, which has been down because of imports of cheaper refined palm oil from Malaysia, will pick up.
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