Malaysia will not take retaliatory action against India over the latter's boycott of Malaysian palm oil purchases, Prime Minister Dr Mahathir Mohamad has acknowledged.

"We are too small to take retaliatory action. We have to find ways and means to overcome that," the premier was quoted telling reporters in Langkawi, Kedah.

Mahathir was commenting on India's move earlier this month to halt imports of palm oil purchases from Malaysia, amid a "cold" diplomatic row between the two countries.

The matter ignited following Mahathir's remark against New Delhi's revocation of (Article 370) accorded to the Indian-administered area in Kashmir, as well as the introduction of India's new citizenship law, which critics have claimed was discriminatory to Muslims there.

India has been the biggest Malaysian palm oil buyer the past five years and the boycott move is expected to hit the world's second largest oil palm producer, after Indonesia, where it hurts.

Palm oil transactions 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.

Besides the Jammu-Kashmir and citizenship law issues, New Delhi is also involved in a tug-of-war with Putrajaya in the matter involving the repatriation of controversial Muslim preacher Zakir Naik.

India has asked Malaysia to send back the preacher, who holds a permanent resident status here, to face money laundering and terrorism-related charges there, but Putrajaya has refused to accede to the request.

Source: Reuters