Malaysia has considerably increased its sugar imports from India in a bid to arrest deteriorating trade and political relations between the two countries. The decision to increase imports is a bid to rectify the trade balance with India as well as placate the latter over former Prime Minister Mahathir Mohamad’s criticism of India for its policy over Muslims.
Till now Malaysia had been buying larger quantities of sugar from Brazil and Thailand as compared to India. However, this is set to change in 2020 as sugar imports from India may go up by as much as three times. Traditionally, Malaysia is one of the top importers of sugar globally while India is the largest producer of the commodity and is sitting on large stocks.
India had been the largest importer of palm oil from Malaysia but reduced imports after the former Prime Minister publicly voiced his resentment over the Citizenship Amendment Act (CAA), which allows India to provide citizenship to all persecuted religious minorities in Pakistan, Bangladesh, and Afghanistan. Beside the CAA, Mohamad had voiced his criticism of India’s policy in Kashmir. Malaysia, under Mohamad, had been openly espousing the cause of Muslims in a bid to project itself as one of the global leaders of the Muslims.
Beside the political wrangles, Malaysia has been under pressure to reduce its trade deficit with India. Malaysian exports to India touched $10.8 billion as compared to imports which stood at $6.4 billion. However, India’s negative trade balance exists not just with Malaysia, but also with the entire Association of South-East Asian Nations (Asean) block.
India, which was about to sign the Regional Comprehensive Economic Partnership (RCEP) with Asean countries withdrew from the agreement as it noticed that the Free Trade Agreements with many of these countries had pushed up the trade deficit and the RCEP was going to further it. Of the nearly 16 countries, India has a negative trade balance with 11 RCEP countries.
Malaysia has said that it will increase imports of buffalo meat products from India to reduce the deficit further.
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