12/06/2012 (The Star) - When it comes to palm oil-based cooking oil, the heavily populated Indian sub-continent comprising of India, Pakistan, Bangladesh and Sri Lanka can be best described as the world's biggest user of the commodity.

India, for example, imports almost half of its annual edible oils requirement of which palm oil accounts for over 80% mostly from Malaysia and Indonesia.

India also used to dominate about 65% of Malaysia's total exports of palm oil products. However, since the late 90s, India had opted to purchase the more attractively priced palm oil from Indonesia.

Of the total seven million tonnes of palm oil imported by India last year, only 1.8 million tonnes are from Malaysia while the bulk is from Indonesia.

Interestingly, the situation is set to change this year thanks to the changes in Indonesia's export duty structure, say industry experts.

The impact is also reflected by the latest trade figures from the Malaysian Palm Oil Board which showed that local palm oil imports into India in the first quarter 2012 had almost doubled to 576,645 tonnes from 286,214 tonnes in the first quarter 2011.

Indonesia's move to reduce its export duty in its effort to nurture its domestic palm oil refineries by keeping most of the feedstock locally had made it difficult for edible oil refineries in India to obtain consistent supply of palm oil feedstock.

To a certain extent, this has resulted in the closing down of several small refineries in India.

India is now turning to Malaysia for the imports of its palm oil products.

Therefore, it is indeed timely for Malaysia to take full advantage of the situation in India to push for local palm oil consumption there.

In fact, the trade mission headed by Plantation Industries and Commodities minister Tan Sri Bernard Dompok to India last week should be applauded as it has created greater awareness on Malaysian palm oil and opens up more opportunities in terms of partnerships and strategic alliances to expand the edible oil and palm oil downstream businesses between the two countries.

Unknown to many, Indian companies such as Tata, Birla and Allana Groups had pioneered the establishment of palm oil refineries in Malaysia back in the 70s and 80s,

Industry experts pointed out that Malaysia, as an established palm oil exporter, could offer better trade facilities to India especially in terms of logistics and financing benefits.

To facilitate financing, the Export-Import Bank of Malaysia Bhd (Exim Bank) last week signed a collaborative deal with Indian banks, ICICI Bank Ltd and YES Bank, to further enhance Malaysia-India trade especially for palm oil.

Exim Bank will provide credit lines to ICICI Bank, which is India's largest private sector bank and YES Bank, to facilitate the imports of manufactured goods and commodities from Malaysia.

Palm oil is envisaged to be among the leading sector that would benefit from the scheme in view of the importance of the Indian market to the Malaysian palm oil sector.

India, meanwhile, can also look into the prospects of exporting rice and wheat, which are “staple” commodities in Malaysia and are always in high demand.