MUMBAI (Reuters) - Indian refiners have stopped buying Malaysian palm oil for shipment in November and December fearing New Delhi could raise import taxes or enforce other measures to curb imports from the Southeast Asian nation, five traders told Reuters on Monday.

FILE PHOTO: A worker collects palm oil fruits at a plantation in Bahau, Negeri Sembilan, Malaysia January 30, 2019. REUTERS/Lai Seng Sin/File Photo

Lower purchases by India, the biggest buyer of Malaysian palm oil so far in 2019, could lead to higher inventories and put pressure on Malaysian palm oil prices FCPOc3. It could also help rival Indonesia increase its shipments to India.

India is considering restricting imports of some products from Malaysia including palm oil after Kuala Lumpur criticized New Delhi for its actions in Kashmir, Reuters reported on Friday.

India’s government has not made any public remarks about Malaysian palm oil. The Commerce Ministry did not immediately respond to a request for comment on Monday.

“We need clarity before doing business with Malaysia,” said a Mumbai-based dealer.

His trading firm was about to buy 5,000 tonnes palm oil on Friday from Malaysia for November shipment but decided not to proceed after reading about potential disruptions.

If the government did not provide clarity in coming days, the trader said he would buy from Indonesia.

Malaysian palm oil futures slumped for a second straight day on Monday due to concerns about the possible Indian import restrictions and weakness in related edible oils.

“Traders are confused on both sides. They don’t know how to plan their shipments,” said Sandeep Bajoria, chief executive of Sunvin Group, a Mumbai-based vegetable oil importer.

“On the cautious side, buyers are preferring Indonesian shipments to avoid any possible impact of higher duties,” he said.

Palm oil accounts for nearly two-thirds of India’s total edible oil imports. India buys more than 9 million tonnes of palm oil annually, mainly from Indonesia and Malaysia.

In the first nine months of 2019, India bought 3.9 million tonnes of Malaysian palm oil, with monthly imports of about 433,000 tonnes, Malaysian Palm Oil Board data showed.

Most October import contracts have already been signed, said a Mumbai-based dealer with another trading firm, adding imports would plunge from November as traders shunned new contracts with Malaysian sellers.

Malaysia traditionally cornered the bulk of India’s refined palm oil shipments, while Indonesia dominated crude palm oil supplies, said Govindbhai Patel, managing director of trading firm G.G. Patel & Nikhil Research Company.

Indonesia usually sold palm oil at a discount to Malaysia but that could be narrowed or wiped out if all Indian palm oil buying switched to Jakarta, said Bajoria of Sunvin Group.

India, the world’s biggest importer of edible oils, also buys soyoil from Argentina and Brazil, and sunflower oil from Ukraine.

Malaysia’s Prime Minister Mahathir Mohamad said on Sunday his government would monitor the trade situation with India.

India’s government was angered after Mahathir said at the United Nations last month that India had “invaded and occupied” Jammu and Kashmir and asked New Delhi to work with Pakistan to resolve the issue.

Muslim-majority Kashmir is divided between India and Pakistan, which both claim it in full and have twice gone to war over the territory. India revoked the special constitutional status of its portion of Kashmir in August, imposed a communications clampdown in the region and made mass arrests.