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India Malaysia Trade

India Malaysia Trade Agreement

Last updated: Mar, 2024

Introduction

India established diplomatic relations with the Federation of Malaya (predecessor state of Malaysia) in the year 1957. India and Malaysia have developed close political, economic, and sociocultural relations presently. Malaysia hosts the third largest PIO community in the world after the US and UAE. There is growing engagement in all aspects of the bilateral relationship. The year 2022, marks 65 years of diplomatic ties between Malaysia and India and presents an opportunity to further strengthen and diversify the existing ties, especially in the economic sphere.

India-Malaysia Trade

  • Malaysia is the 13th largest trading partner for India while India stands amongst the 10 largest trading partners globally. Furthermore, Malaysia has emerged as the third largest trading partner for India from the ASEAN region and India is the largest trading partner for Malaysia among the countries of the Southeast Asian region.
  • Bilateral trade reached US$ 19.89 billion during 2022-23.
  • This includes exports worth approx. US$ 7.15 billion and imports worth approx. US$ 12.73 billion.
  • Malaysia ranks as the 31st largest investor in India with an FDI inflow of US$ 1.18 billion from April 2000-September 2023.
  • Bilateral trade reached US$ 11.75 billion in April-November 2023. This includes exports worth US$ 4.33 billion and imports worth US$ 7.42 billion.
  • Surrounded by busy sea lines of communication such as the Strait of Malacca and the South China Sea, Malaysia is also a key pillar of India’s Act East policy and critical to India’s maritime connectivity strategies.

Major exported items from India to Malaysia with amount & quantity

  • India exported 5,286 commodities to Malaysia in FY23.
  • India’s export to Malaysia stood at US$ 7.15 billion during 2022-23.
  • Major exported items from India to Malaysia include petroleum products (US$ 1.40 billion), aluminium & products of aluminium (US$ 0.78 billion), buffalo meat (US$ 0.53 billion), organic chemicals (US$ 0.49 billion), other commodities (US$ 0.31 billion), electric machinery & equipment (US$ 0.20 billion), etc. during 2022-23.
  • India’s export to Malaysia stood at US$ 4.33 billion from April-November 2023.
  • Major exported items from India to Malaysia include engineering goods (US$ 1.23 billion), petroleum products (US$ 1.03 billion), organic and inorganic chemicals (US$ 371 million), meat, dairy and poultry products (US$ 336 million) and others (US$ 246 million), etc. during April-November 2023.

Major imported items by India from Malaysia with amount & quantity

  • India imported 2,924 commodities from Malaysia in FY23.
  • India’s imports from Malaysia stood at US$ 12.73 billion in 2022-23.
  • Major items imported by India from Malaysia include vegetable oils (US$ 3.60 billion), petroleum; crude (US$ 1.24 billion), computer hardware (US$ 0.64 billion), organic chemicals (US$ 0.60 billion), petroleum products (US$ 0.43 billion), plastic raw materials (US$ 0.39 billion), etc. during 2022-23.
  • India’s imports from Malaysia stood at US$ 7.42 billion from April- November 2023.
  • Major items imported by India from Malaysia include vegetable oils (US$ 1.64 billion) followed by electrical machinery and equipment and parts thereof (US$ 1.07 billion), petroleum products (US$ 1.01 billion), nuclear reactors, boilers, machinery, and mechanical appliances; parts thereof (US$ 659 million) and organic chemicals (US$ 341 million) from April-November 2023.

Economic Relations and Investments

  • India and Malaysia have taken a step towards strengthening their economic ties by agreeing to allow bilateral trade in their respective currencies, which will allow Indian businesses to pay Indian Rupees and vice versa. This is expected to boost trade between the two countries and reduce dependence on the US dollar. The effort of the Indian government to increase its engagement in South Asia has paved the way with the agreement of trading in local currencies. India has tried to economic footprint in the region in the last decade and has signed similar agreements with other countries such as Japan, South Korea, and Iran.
  • Malaysia ranked as the 31st largest investor in India with an FDI inflow of US$ 1.18 billion during the period April 2000-September 2023.
  • Considering the Mauritius route, Malaysia's investments in India are expected to be to the tune of US$ 7 billion.
  • The highest investment proposals are in the telecom sector, followed by fuels, roads, and highways. Some of the top Malaysian companies have invested in India, notably in the telecom sector (Maxis Communications in Aircel (US$ 2 billion), Axiata in Idea Cellular (US$ 0.75 billion), and Khazanah in IDFC, Apollo Hospitals, Yes Bank, etc. Construction projects include the construction of the airports in Hyderabad (in 2008) and Delhi (in 2010) through a partnership between India’s GMR and Malaysian Airports. The largest presence of Malaysian construction companies outside Malaysia is in India.
  • There are more than 150 Indian companies, including 61 Indian joint ventures, operating in Malaysia, in diverse sectors such as textiles and yarn manufacture, drugs and pharmaceuticals, specialty chemicals, information technology, education, steel furniture, biotechnology, healthcare, etc.
  • In terms of tourism, India remains one of the top market sources for Malaysia and has contributed 735,309 arrivals (+22%) in 2019, while more than 332,000 Malaysians visited India during the same period reflecting a healthy tourist exchange.

Recent Trends & developments

  • India and Malaysia marked 65 years of modern diplomatic relations at a commemorative event, “India-Malaysia@65” held on September 9, 2022, organised by the Consortium of Indian Industries in Malaysia (CIIM) and Malaysia India Business Council (MIBC) at the Kuala Lumpur Convention Centre in Malaysia
  • Taking forward the high-level defence engagements, the Defence Ministers of India and Malaysia held a virtual bilateral meeting in June 2022
  • Minister of Human Resources, Malaysia, Mr. Sivakumar Varatharaju Naidu, in his address at the 17th Pravasi Bhartiya Divas Convention indicated the signing of a Memorandum of Understanding to be signed between India and Malaysia on recruitment and employment of workers.
  • Economic cooperation between Malaysia and India was reviewed at the Foreign Office Consultations (FOC) meeting held in April 2022 and it was decided to enhance all aspects of cooperation and to make the partnership truly meaningful and mutually beneficial.
  • An MOU on the Establishment of an Academic Chair in Ayurveda between the University Tunku Abdul Rahman (UTAR) and the Institute of Teaching and Research in Ayurveda (ITRA) Jamnagar was signed in October 2021
  • Minister of Defence Mr. Rajnath Singh inaugurated the Regional Office of Hindustan Aeronautics Limited (HAL) in Kuala Lumpur, Malaysia on July 11, 2023, recognising defence exports as a key pillar of sustainable growth of the Indian defence industry. This Regional Office will facilitate close defence industrial collaboration between India and Malaysia. It will also serve as a hub for the HAL’s engagement with the wider South-East Asian region and act as a window for other Indian Defence PSUs.
  • India’s public service broadcaster, Prasar Bharati entered into a Memorandum of Understanding with Radio Televisyen Malaysia, the public service broadcaster of Malaysia in order to promote cooperation in public broadcasting in the field of radio and television. The Union Cabinet chaired by the Prime Minister, Mr. Narendra Modi approved the MoU signed on November 07, 2023, which has an immense potential to strengthen the cooperation in the field of broadcasting, exchange of news, and audio-visual programmes as well as significantly augment India’s friendly relations with Malaysia.

Conclusion

India and Malaysia completed 65 years of modern diplomatic relations in 2022. The relations between India and Malaysia have grown from a Strategic Partnership to an Enhanced Strategic Partnership in the last 10 years, with new cooperation in cultural diplomacy, digital economy, and agriculture commodities forthcoming.

Contacts

  • High Commission of India, Kuala Lumpur
    Address: Level 1, Wisma HRIH Lotus, No. 442
    Jalan Pahang, Setapak, 53000 Kuala Lumpur.

    Officials
    Mr. B.N. Reddy (High Commissioner)
    Telephone: +6 03 4025 3366
    Email: com.kl@mea.gov.in
    Ms. C. Sushma (First Secretary - Commerce and Education);
    Telephone: +6 03 4025 2323
    Email: fscom.kl@mea.gov.in
  • High Commission of Malaysia, India
    Address: No. 50-M, Satya Marg, Chanakyapuri, New Delhi, Delhi - 110021
    Telephone: +011 2415 9300
    Email: mwdelhi@kln.gov.my

    Officials
    Mr. Dato' Muzafar Shah Mustafa (High Commissioner)
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