India's Trade Diplomacy with Malaysia & Turkey: UPSC Preparation Notes

Rajya Sabha TV programs like ‘The Big Picture’, ‘In Depth’ and ‘India’s World’ are informative programs that are important for UPSC preparation. In this article, you can read about the discussions held in the ‘Big Picture’ episode on “India’s Trade Diplomacy With Malaysia, Turkey” for the IAS exam. You will find the accompanying video at the end of this article.

What is the context behind India’s trade diplomacy with Turkey and Malaysia?

• India is planning to cut some imports from Turkey and widen curbs on palm oil imports from Malaysia to oil, gas and other products.
• India is reportedly taking these steps in response to the decisions of Turkey and Malaysia to side with Pakistan on the matter of Article 370 and the Citizenship Amendment Act.
• According to the report, New Delhi is now planning to restrict buying petroleum, aluminium ingots, liquefied natural gas, computer parts and microprocessors from Malaysia.
• The same report goes on to add that the government is also planning to cut imports of oil and steel products from Turkey. 
• Malaysia is now looking to use diplomatic channels to try and resolve concerns over palm oil exports. 

Larger Background:

• India has always claimed J&K to be an integral part of its territory, however, parts of it are illegally occupied by China and Pakistan.
• The Indian Government had withdrawn Article 370, which gave J&K a special status and had bifurcated J&K into two union territories. This was quite a controversial move and was taken up at the United Nations General Assembly (UNGA) meeting in New York last year.
• Four countries- Pakistan, China, Malaysia, and Turkey had raised the Kashmir issue at the United Nations in different ways. Although it was expected from the other three countries, Malaysia raising the issue at the UNGA and almost calling India an invading force in Kashmir was a definite surprise.
• The comments from the Malaysian Prime Minister was termed by India as irresponsible and ill-informed.
• Malaysian Prime Minister Mahathir has made several such historically inaccurate comments and has refused to take them back.

India’s relations with Malaysia

• India is the world’s biggest buyer of palm oil. Malaysia is a relatively large trading partner of India in this respect. 
• PM Modi had invested goodwill in Malaysia, by being the first foreign leader to drop in on the Malaysian PM after his re-election to congratulate him.
• However, after the Malaysian PM’s latest comments on the Kashmir issue and his criticism of India’s new Citizenship law, there is a shift in the relationship:
  • Reports have quoted industry representatives as saying Indian importers and refiners are moving palm oil purchases from Malaysia to Indonesia.
  • The Solvent Extractor’s Association of India advised its members to not buy refined palm oil from Malaysia.
  • The electronics being imported from Malaysia might also be stopped.
• Although the economic relationship between India and Malaysia is flourishing, their political and strategic relationships are not on the same page.
• Malaysia has been providing residency to controversial preacher Zakir Naik and ignoring India’s requests to extradite him.
• The statements by the Malaysian Prime Minister might result in a strained relationship with India which could adversely affect the Malaysian economy, as palm oil exports had contributed to about 2.8 percent of the nation’s GDP in 2018, and India has been one of the largest importers of palm oil. This could also affect the people involved in this sector, who are usually from rural areas.

What prompted Malaysia to make a move against India?

• Malaysian PM has nothing against India personally, however, he is currently in a power tussle with his political partner Anwar Ibrahim.
• He has targeted not only India but Israel as well on the Palestine issue, and by doing so is attempting to balance his own domestic political compulsions.
• India has not reacted publicly to any issues in the past, hence it is a possibility that the Malaysian Prime Minister thought that India would be an easy target, however, India sent out a clear message this time that in the process of playing domestic politics, if India is used in any manner by a country, then the country would have to pay a domestic price.

Will India be affected by the powerplay in the Islamic world?

• The Islamic world has been going through a lot of chaos in recent times as the emergence of new contenders for power has increased. This has caused a minor rift among the Organisation of Islamic Cooperation (OIC)
• Countries such as Turkey, Iran, and Saudi Arabia are among the few who are hoping to lead the Islamic world and dominate over regional rivals by acting as a power-bloc. This is primarily due to the chaos in the middle-east and the steady withdrawal of the US.
• Turkey is trying to find a new role for itself, however, in the light of recent events, India has put off all the engagements with Turkey.
• India runs a Trade Surplus with Turkey, i.e., it exports more to the country than it imports from the country. 
• However, India has made some friends among this chaos such as Saudi Arabia, a country with whom India has only had an inconsistent relationship so far.
• India is finally overcoming its reluctance to forge security partnerships with the Gulf states whose security apparatuses had long been closely associated with Pakistan.
• Over the past four years, PM Modi has built close bonds with young Gulf leaders, including with the crown princes of Abu Dhabi and Saudi Arabia.
• These efforts seem to be paying off as unlike Turkey and Malaysia, Saudi Arabia has taken a positive approach vis-a-vis India and the abrogation of Article 370. The country has also cautioned Pakistan against escalating the crisis.
• The UAE has also extradited three individuals wanted in India on corruption charges and Saudi Arabia also promised to share intelligence to boost counterterrorism cooperation with India.
• This could also be due to Pakistan’s decreasing credibility. 

Would India react in the same manner with China?

• China is one of the largest economies in the world. Hence, India would have to react differently with China. 
• China has always tried to limit India’s influence to South Asia instead of allowing it to occupy the international space that it deserves.
• One of the reasons why India backed out of the RCEP deal is because of possible economic domination by China. So India cannot react in the same manner with China for supporting Pakistan and interfering with India’s internal affairs.
• India will have to exert diplomatic pressure and negotiate in order to make China understand India’s point of view.

To know more in detail about the key aspects of the relation between India and China relations, visit the linked article.

Conclusion:

• India has sent a firm message to the world that any country which tries to use India for its domestic politics, would have to pay a price, and has convinced most of the countries that the issue of Kashmir is a matter of internal affairs of India.
• India cutting its exports from Malaysia could affect the Malaysian economy drastically and hence, Malaysia might be forced to make a course correction.
• However, care must be taken by India to use this measure sparingly, in order to ensure that it does not escalate into a trade war.

India’s Trade Diplomacy With Malaysia, Turkey: RSTV – Big Picture:- Download PDF Here