ASSESSMENTS

In India’s Rift With Malaysia, Palm Oil and Politics Don't Mix

Jan 29, 2020 | 09:00 GMT

This photo shows palm oil fruit after harvest.

India has not expressly targeted Malaysia with restrictions on palm oil imports it put into place in January, but the action came after Malaysia's prime minister criticized Indian policies as detrimental to Indian Muslims.

(ZIKRI MAULANA/SOPA Images/LightRocket via Getty Images)

Highlights

  • India's new restriction on palm oil imports is intended to deliver a blow to Malaysia, whose prime minister publicly criticized New Delhi's divisive nationalist policies. 
  • The import cuts illustrate the desire of the ruling Bharatiya Janata Party to both protect its controversial, yet politically effective, platform from international scrutiny and shield India's domestic palm oil refiners from foreign competition.
  • As the ruling party's second term unfolds, these political and economic drivers could make India's other smaller trade partners vulnerable to similar trade salvos. 

A burgeoning dispute between the world's biggest importer of edible oils and one of the world's biggest suppliers of them is heating up in Southeast Asia. On Jan. 8, India restricted imports of refined palm oil and palm olein. While the trade cuts didn't call out any specific countries, they were intended to hit Malaysia after its leader condemned the Indian government's controversial new policies as being discriminatory against Muslims. As the ruling Bharatiya Janata Party (BJP) struggles to revive India's sluggish economic growth, it will have all the more incentive to advance the religious and identity-based issues underpinning its Hindu nationalist platform. And as evidenced by its palm oil rift with Malaysia, New Delhi won’t be afraid to leverage its trade market to coerce smaller countries into silence. ...

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