India-Malaysia ties back on upswing; Kuala Lumpur to buy more rice, sugar

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New Delhi: Relations between India and Malaysia are back on the upswing after taking a hit under former premier Mahathir Mohamad, with Kuala Lumpur increasing its purchases of rice and sugar from New Delhi in recent months.

India quietly initiated steps to reset the relationship after Mahathir, who irked New Delhi with his repeated criticism of the situation in Kashmir and the Citizenship (Amendment) Act (CAA), resigned in March, people familiar with developments said on Monday.

India’s ambassador to Malaysia, Mridul Kumar, was the first foreign envoy to meet new Prime Minister Muhyiddin Yassin and foreign minister Hishammuddin Hussein within a week of the formation of the new cabinet in March, and the two sides have worked behind the scenes to put ties back on an even keel.

The people cited above, who spoke on condition of anonymity, said India is buying 200,000 tonnes of palm oil for the June-July period from Malaysia, the world’s second-biggest producer and exporter of the commodity after Indonesia.

Earlier this year, India, the world’s largest buyer of edible oils, had changed its rules to effectively bar imports of refined palm oil from Malaysia, largely because of the position taken by Mahathir.

“This is the largest order for palm oil by India in the past few months,” said one of the people cited above.

Indian importers will also benefit from Malaysia’s decision of June 5 to fully exempt palm oil from export duty for the rest of this year as part of efforts to help industries hit by the Covid-19 crisis.

“This move will benefit India’s refining industries, which had been hit hard by the imposition of this duty earlier in the year. This duty has been a focus of India’s commerce ministry,” the person said.

On the other hand, Malaysia has placed an order with India for 100,000 tonnes of rice for May-June, whereas its total import of rice from India last year was around 85,000 tonnes, the people said.

MSM Malaysia Holdings, the country’s leading refined sugar producer, bought around 88,000 metric tonnes of raw sugar from India last year, whereas it procured 130,000 metric tonnes of raw sugar worth $50 million for the January-March quarter this year, the people said.

Following the Covid-19 outbreak, the Indian government also approved the supply of hydroxychloroquine and paracetamol for Malaysia, the people said. External affairs minister S Jaishankar and his Malaysian counterpart Hishammuddin Hussein also spoke in mid-April about the response to the pandemic and efforts to assist citizens stranded in each other’s country.

Malaysia is one of India’s key trading partners in Southeast Asia, and bilateral trade was worth $17.25 billion in 2018-19, up from $14.71 billion in 2017-18

However, bilateral ties were hit after Mahathir repeatedly criticised CAA and the situation in Kashmir after the Indian government scrapped the region’s special status last August.

Despite push back from India, Mahathir continued his criticism and the diplomatic spat led to India imposing curbs on palm oil imports that hit Malaysia for some time.

Last December, Mahathir had said people were “dying” because of CAA, prompting India to dismiss his remarks as factually inaccurate. During the UN General Assembly last September, Mahathir said Kashmir had been “invaded and occupied”. At that time, New Delhi had said he was interfering in India’s internal affairs and such statements went against the spirit of long-standing bilateral ties.

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