Recently the Indian government has requested trading companies to stop importing refined palm oil from Malaysia. Market players understand that importing palm oil from Malaysia is effectively banned in India. India is a major importer of edible oil, and a major destination for palm oil exported by Malaysia. There is information that Indian government has instructed stakeholders to expand imports of Indonesian palm oil.

Malaysia's Prime Minister Mahathir said that India "invaded and occupied" Kashmir, a disputed Muslim-majority region also claimed by Pakistan. He has also recently criticized the new citizenship law of India that gives non-Muslim illegal immigrants citizenship. A ban in imports of Malaysian palm oil in India is seen to be a retaliatory measure against political criticisms by Mahathir.

According to a major local newspaper in Malaysia, Mahathir has expressed a refusal to withdraw his criticism of Indian government policy, although concerns arose about the negative impact on the Malaysian palm oil market. Malaysian palm oil exports to India in 2019 were around 4 mil tons, and India is its largest export destination.