Malaysia will increase the purchase of sugar from India, to appease the latter amid tensions regarding palm oil imports.

Two sources familiar to the matter told Reuters that MSM Malaysia Holdings Berhad, the sugar refining arm of FGV Holdings, owned by Felda, will buy 130,000 tonnes of raw sugar from India, worth RM200 million, in the first quarter of this year.

This is higher compared to the 88,000 tonnes of raw sugar Malaysia bought from India, the whole of last year.

Early this month, India halted the import of Malaysian palm oil, believed in retaliation to a couple of remarks by Malaysian Prime Minister Dr Mahathir Mohamad, on matters concerning New Delhi.

Last September, Mahathir, while speaking at the UN General Assembly, lambasted India for "invading and occupying" Jammu and Kashmir, after New Delhi revoked Article 370, which accorded the Indian-administered are in Kashmir, autonomous status.

Then in December, Mahathir also criticised New Delhi's implementation of a new citizenship law, which critics have claimed was discriminatory to Muslims in India.

India's boycott of Malaysian palm oil is expected to hit the latter hard, as India has been the biggest buyer of Malaysian palm oil for five years. Palm oil transactions also account to 2.8% of Malaysia's gross domestic product, and 4.5% of total exports.

Last week, benchmark Malaysian palm futures fell nearly 10% - the biggest slump in over 11 years.

Source: Reuters
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