palm oil Malaysia
Workers stand near palm oil fruits inside a palm oil factory in Sepang, outside Kuala Lumpur, .Reuters

India is planning to leverage its market and economic muscle to retaliate against Turkey and Malaysia for their public statements on Kashmir and support for Pakistan at the FATF. Sources have learnt that India is weighing a range of diplomatic options against Malaysia and Turkey, including on the trade of front to send a strong response. As per a report in The Times of India, the Centre is monitoring the popular discontent against buying Malaysian palm oil and social media trends with #boycottmalaysia.

There have been speculations in the market that Indian importers and refiners are moving palm oil purchases from Malaysia to Indonesia. The step is likely to dent Malaysia badly as India being the world's largest palmolein importer has imported $900 million worth of this oil from Malaysia in the first six months of 2019 alone. For a fact, India is the second-largest buyer of palmolein from Malaysia. The island is not ready to bow down to pressure from India as Malaysian PM Mahathir Mohammed said that his government "work diplomatically" with India to resolve the trade problems if India takes any decision against Malaysia.

Malaysian Prime Minister Mahathir Mohamad
Malaysian Prime Minister Mahathir Mohamad addresses the 74th session of the United Nations General Assembly at UN headquarters in New York City, New York, US, September 27, 2019.Reuters

He said, "We have not received anything officially. This is the reaction from the business community. Hence, we cannot react to their personal decisions ... If the (Indian) government launched a boycott or something like that, then we will have to work diplomatically or reduce the kind of action that they have taken." There are further speculations that Malaysia may raise imports of bovine meat from India to placate India.

However, there is no official statement from Modi government and if the reports are to be believed India is closely observing the situation before taking any action. Last month, in order to protect local refiners, India raised taxes on refined palm oil from Malaysia to 50 per cent from 45 per cent for six months. Another major reason that has irked India is Malaysia's refusal to extradite Islamist preacher Zakir Naik.

Moreover, India is also taking against Turkey over its support to Pakistan on Kashmir and FATF list. India has barred a Turkish defence company Anadolu Shipyard from building support ships for the Indian navy. Turkey, in fact, is also supporting Pakistan build ships for its navy. Indian defence ministry officials have even called the development as a military threat to India.