India-Malaysia relations elevate ties: A new era of comprehensive strategic partnership

India and Malaysia, two nations with deep historical ties and vibrant cultural exchanges, have taken a significant step forward in their relationship by elevating their bilateral ties to a Comprehensive Strategic Partnership. This important development came after extensive talks between Indian Prime Minister Narendra Modi and his Malaysian counterpart, Anwar Ibrahim, during the latter’s state visit to India. The discussions covered a wide range of sectors, including trade, investment, defence, and people-to-people ties, marking a new era of cooperation between the two countries.

Strengthening Trade and Economic Cooperation

Prime Minister Narendra Modi emphasized the importance of enhancing economic cooperation between India and Malaysia. “We believe that there is still a lot of potential in economic cooperation. Bilateral trade and investment should be expanded,” Modi stated. The two leaders agreed on the need to accelerate the review of the Comprehensive Economic Cooperation Agreement (CECA) between the two nations. This agreement is expected to play a crucial role in furthering trade relations, especially in emerging areas such as semiconductors, fintech, and the defence industry.

Bilateral trade between India and Malaysia is already robust, with a volume of around US$20 billion. Malaysia is India’s 16th largest trading partner, while India ranks among the top ten trading partners for Malaysia. The two countries have also initiated the practice of settling bilateral trade in their respective currencies, the Indian Rupee and the Malaysian Ringgit, which is seen as a significant step towards reducing dependency on third-party currencies like the US dollar.

Defence and Security Cooperation

Defence and security were key areas of discussion during the talks. Both leaders recognized the importance of enhancing cooperation in this domain, particularly in the context of regional security challenges. India expressed its interest in supplying defence equipment to Malaysia, including aircraft manufactured by Hindustan Aeronautics Limited (HAL). The two sides also deliberated on new possibilities of collaboration in defence technology and joint military exercises.

Prime Minister Modi highlighted the need for mutual cooperation in countering terrorism and extremism, areas where both countries share common concerns. “We are also unanimous in the fight against terrorism and extremism,” Modi said, underlining the shared commitment of India and Malaysia to regional stability and security.

People-to-People Ties and Cultural Exchanges

The close cultural and historical ties between India and Malaysia were also a focal point of the discussions. Malaysia is home to nearly 3 million people of Indian origin, making it one of the largest Indian diaspora communities in the world. The two leaders agreed on the importance of fostering people-to-people connections and enhancing cultural exchanges.

To strengthen these ties, it was decided to establish an Ayurveda chair at Malaysia’s University Tunku Abdul Rahman and a Tiruvalluvar Chair at the University of Malaya. These initiatives are expected to promote greater understanding and appreciation of Indian culture and traditions in Malaysia.

Digital and Technological Collaboration

Another significant area of collaboration is digital technology. India and Malaysia agreed to establish a digital council for cooperation in digital technology and to form a startup alliance. The leaders also discussed the possibility of connecting India’s digital payment system, Unified Payments Interface (UPI), with Malaysia’s PayNet, which would facilitate easier and more secure transactions between the two countries.

Modi emphasized the potential of digital collaboration, stating, “We should increase mutual cooperation in new technological areas, such as semiconductor, fintech, defence industry, artificial intelligence, and quantum.” This focus on technology is expected to open up new avenues for innovation and growth in both nations.

The Significance of the MoU on Worker Recruitment

One of the key agreements signed during the visit was a Memorandum of Understanding (MoU) on the recruitment of Indian workers to Malaysia. This pact is particularly significant given the issues of illegal immigration and human trafficking that have affected both countries. The agreement aims to promote the recruitment of Indian workers in Malaysia while ensuring the protection of their rights and interests.

Prime Minister Modi underscored the importance of this MoU, stating that it would not only facilitate the recruitment process but also safeguard the welfare of Indian workers in Malaysia. The pact is expected to strengthen the labour ties between the two countries and contribute to the well-being of Indian workers abroad.

Strategic Partnership in the Indo-Pacific

The elevation of India-Malaysia ties to a Comprehensive Strategic Partnership also holds strategic importance in the broader Indo-Pacific region. Malaysia is seen as a key partner for India in this region, particularly in the context of ASEAN (Association of Southeast Asian Nations) centrality. Prime Minister Modi reaffirmed India’s commitment to ASEAN centrality, stating, “India gives priority to ASEAN centrality. We agree that the review of the FTA (free trade agreement) between India and ASEAN should be completed in a timely manner.”

From Malaysia’s perspective, Prime Minister Anwar Ibrahim expressed a strong commitment to deepening ties with India. He referred to India as an “important partner” and described the relationship as one rooted in true friendship.

Ibrahim’s visit to India, his first since taking office, comes at a time when both countries are celebrating nearly a decade of enhanced strategic partnership, first established during Modi’s visit to Malaysia in 2015. The close rapport between the two leaders, which dates back to their interactions during the 2019 Raisina Dialogue, has laid a strong foundation for the future of India-Malaysia relations.

Joint Statement

According to the joint statement issued at the end of the meeting, both leaders agreed to support and expedite the review process of ASEAN- India Trade in Goods Agreement (AITIGA) to make it more effective, user-friendly, simple, and trade-facilitative for businesses, aiming to achieve a substantial conclusion in 2025 and to strengthen supply chains between India and ASEAN countries. 

They also welcomed the discussions on convening the 2nd Joint Committee Meeting of Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA). To promote usage of local currency settlement in bilateral trade and investments, the two agreed collaboration between the Reserve Bank of India and Bank Negara Malaysia. 

They urged the industries on both sides to further facilitate the invoicing and settlement of trade in local currencies, — Indian Rupee and Malaysian Ringgit.