* Trade ministers likely to meet next week in Davos
* Both countries want to find a diplomatic solution: sources
* India palm oil import curbs could hit Malaysia
Trade ministers from India and Malaysia are likely to meet on the sidelines of the World Economic Forum's annual meeting in Davos next week amid a palm oil spat between the two countries, a Malaysian government spokesman told Reuters on Friday.
India has repeatedly objected to Malaysian Prime Minister Mahathir Mohamad speaking out against its recent policies.
Malaysia, is the second biggest producer and exporter of palm oil and India's restrictions on the refined variety of the commodity imposed last week have been seen as a retaliation for Mahathir's criticism of New Delhi's actions.
India's trade minister Piyush Goyal denied on Thursday that the government was trying to hit out at Malaysia in particular.
The row between the countries, nevertheless, pushed benchmark Malaysian palm futures to its biggest weekly decline in more than 11 years on Friday.
No agenda has been set for the proposed meeting between Goyal and his Malaysian counterpart Darell Leiking on Friday, the spokesman for Malaysia's Ministry of International Trade and Industry said, adding that the request for a meeting had come from India.
An Indian government source said a meeting was indeed likely with Leiking. A spokeswoman for India's trade ministry did not respond to a request for comment.
Reuters reported on Thursday that Malaysia did not want to escalate the palm spat with India by talking of any retaliation for now, after Mahathir's media adviser called for tighter regulations on Indian expatriates and products. Malaysia instead wants to rely on diplomacy.
A separate Indian government source said it was important for New Delhi also to talk things out with Malaysia.
‘We too have a lot to lose in Malaysia, there are 2 million Indian-origin people there,’ the source said.
There were a total of 117,733 Indian nationals registered as foreign labour in Malaysia as at June 2019, accounting for nearly 6% of the total foreign workforce in the country. Ethnic Malaysian-Indians are the third-largest community in the Southeast Asian country.
Another reason for frosty ties between the countries is the continued presence of controversial Indian Islamic preacher Zakir Naik in Malaysia, said one of the sources.
Naik, who faces charges of money laundering and hate speech in India, has lived in Malaysia for more than three years and has permanent residency in the country. He denies the Indian accusations.
The sources declined to be identified as they were not authorised to talk to the media.
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