Indian buyers have resumed purchases of Malaysian palm oil after a four-month gap following a diplomatic row, with buying spurred by a fall in domestic inventories and discounted prices, trade sources said.

The renewed purchases come amid improving trade relations between the two countries after the formation of a new government in Kuala Lumpur, with Malaysia signing a deal last week to buy a record 100,000 tonnes of Indian rice.

Leading Indian importers last week contracted up to 200,000 tonnes of crude palm oil from Malaysia, the world's No.2 producer after Indonesia, to be shipped in June and July, the sources told Reuters.

"Port stocks have dropped sharply in India because of lower imports," said a Singapore-based trader who sells Malaysian and Indonesian palm oil.

Ship-tracking data compiled by Refinitiv showed that India's total palm oil imports for the first four months of 2020 FELL by more than 50% from the same period in 2019 to 1.11 million tonnes.

A restart to buying by India, the world's biggest edible oil importer, could further support Malaysian palm oil prices , which have edged up from 10-month lows in recent days.

India early this year restricted imports of Malaysian palm oil after then Prime Minister Mahathir Mohamad criticised policies by New Delhi affecting the country's Muslim minority.

The renewed buying has been spurred by low stocks, while

India's relations with Malaysia have been improving since a new government was formed in early March, said an Indian edible oil refiner who contracted "a few vessels" for June shipment.

"I think the Indian government will allow unloading of upcoming shipments. We can't rely on one seller (Indonesia) indefinitely, especially when you have to build inventory," the buyer said.

India's commerce ministry did not immediately respond to a request for comment on Tuesday.