By Liz Lee and Krishna N. Das
KUALA LUMPUR (Reuters) - Malaysia and India will work on improving ties that soured under former Malaysian Prime Minister Mahathir Mohamad and badly affected palm oil trade between the countries, officials from both nations said on Sunday.
India is the world's biggest palm oil importer but its purchases from Malaysia, the second-biggest palm exporter behind Indonesia, dropped drastically in recent months after attacks on India's policies by Mahathir.
Malaysia swore in a new prime minister on Sunday after last week's resignation by the outspoken Mahathir, 94, after a power battle in his coalition government.
Wee Ka Siong, a lawmaker expected to gain a ministerial post, said that mending ties is a priority because Malaysian palm oil producers have been suffering because of India's effective ban on purchases.
"Can we just renegotiate? It’s for my country as well as for my people," Wee told Reuters. "Since we are a new government, let the PM, the new government deal with it. We treasure the friendship with India."
An Indian official with knowledge of the matter said that New Delhi is also keen to improve bilateral ties, including palm oil trading, provided that Malaysia keeps out of India's domestic affairs.
India could also invite the new Malaysian prime minister, Muhyiddin Yassin, for a visit this year, the official said on the condition of anonymity.
India put refined palm oil and palmolein on its list of restricted items on Jan. 8, a move sources said was in response to Mahathir's criticism of its actions in Kashmir and a new citizenship law.
Malaysia's January palm shipments to India tanked 85% from a year earlier to 46,876 tonnes, the lowest since 2011.
India accounted for nearly a quarter of Malaysia's total palm oil exports last year and has been the biggest buyer of Malaysian palm oil for five years.
India's curbs on Malaysian imports disrupted global edible oil trade flows, with Indonesia diverting supplies to India, Malaysia rushing to tap markets left behind by Indonesia and India substituting palm with other oils.
(Reporting by Krishna N. Das; Editing by David Goodman)