The government on Wednesday imposed restrictions on imports of refined palm oil, a move which could discourage the inbound shipment of the commodity from Malaysia.

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According to a notification of the Directorate General of Foreign Trade (DGFT), "import policy" is amended from "free to restricted" for refined bleached deodorised palm oil and refined bleached deodorised palmolein.

Putting the commodity in a restricted category means an importer will require licence or permission for the inbound shipment.

India, the world's largest importer of vegetable oils, buys nearly 15 million tonne annually. Of this, palm oil comprises 9 million tonne and the rest 6 million tonne of soybean and sunflower oil.

Indonesia and Malaysia are the two countries which supply palm oil. Malaysia produces 19 million tonne of palm oil in a year, while Indonesia produces 43 million tonne, the trade data showed. The move comes in the backdrop of remarks by Malaysia on the new citizenship law and Kashmir issue.

On December 20 last year, Malaysian Prime Minister Mahathir bin Mohamad had reportedly said, "I am sorry to see that India, which claims to be a secular state, is now taking action to deprive some Muslims of their citizenship". "If we do that here, you know what will happen. There will be chaos, there will be instability and everyone will suffer," he had said.

Earlier, Mahathir had said in the UN General Assembly that India had "invaded and occupied" Kashmir. Further according to an industry source, the government has advised importers not to buy palm oil from Malaysia.

"We import 30 percent of the palm oils from Malaysia, while 70 percent from Indonesia. Our refiners can import from Indonesia which produces much higher than Malaysia," the source said. There would not be any extra cost on import from Indonesia as the product and price are the same, the source added.

Commenting on the DGFT's notification, the Solvent Extractors' Association of India said the decision will go a long way in supporting the domestic refining industry by value addition within the country. It will help in improving capacity utilisation of the domestic industry, it said in a statement.

First Published:Jan 8, 2020 10:33 PM IST