Three reasons why Malaysia is vital to India now
Economic, military, strategic, and cultural — there are many advantages to stronger India-Malaysia ties.
Prime Minister Narendra Modi is visiting Malaysia on February 7. Both nations will discuss new terms of trade and modern national security needs.
This will be Modi’s third visit to the Southeast Asian country, the first one since India-Malaysia bilateral ties were elevated to a “Comprehensive Strategic Partnership” in August 2024. But why is Malaysia important to India?
1. World’s 3rd largest Indian diaspora
Malaysia hosts one of the largest diasporas of overseas Indians in the world. The PM will interact with members of the Indian community, as well as industry and business representatives there, according to the Ministry of External Affairs.
Of the 3.54 crore overseas Indians, the US hosts the maximum 54 lakh, the UAE 36 lakh, and Malaysia 29 lakh, according to the Ministry of External Affairs. This makes Malaysia a strategic location to strengthen India-Malaysia trade.
2. Bilateral trade
The headwinds erupting from the West have created a dire need for regional cooperation and self-dependence. While BRICS is one of India's strategic focusses, the ASEAN region is also vital. It’s made up of 10 Southeast Asian countries: Singapore, Indonesia, Malaysia, Thailand, Vietnam, the Philippines, Myanmar, Cambodia, Brunei, and Laos. Malaysia is India’s third-largest trade partner in this group.
In 2024–25, India’s total trade with Singapore was $34.27 billion. Indonesia followed with $28.16 billion. With Malaysia, it was $19.86 billion, and $19 billion with Thailand. India’s trade with ASEAN nearly doubled from $65 billion in FY16 to $123.12 billion in FY25, according to the Ministry of External Affairs.
While India’s trade with the ASEAN region grew significantly, that wasn’t the case with Malaysia specifically. From a total trade of $14.16 billion in FY17, it grew to $19.86 billion in FY25, according to the Ministry of Commerce and Industry.
Malaysia accounted for 1.67 per cent of India's exports and 1.74 per cent of imports in FY25. This leaves a big scope for both nations to rethink the scope of trade.
“Both leaders are expected to take stock of Malaysia-India bilateral relations and explore further collaboration, particularly in trade and investment; defence and security; labour; tourism; connectivity; agriculture; and education,” said Malaysia’s Ministry of Foreign Affairs. The discussion will also include regional and international issues of mutual interest, it added.
3. Strait of Malacca
Malaysia borders the Strait of Malacca, which connects the Andaman Sea to the South China Sea. This is a major trade route for India. “South China Sea is a major waterway and over US$ 5 trillion trade passes through the sea lanes in this region. As per information available, over 55% of India’s trade passes through the South China Sea and the Malacca Strait,” ex-Junior Minister of External Affairs Rajkumar Ranjan Singh had said in Parliament in 2022.
The threat is that the South China Sea remains disturbed due to various geopolitical issues erupting mainly from China, Taiwan, and the US. Given the high stakes, India has been proposing to join the Malacca Strait Patrol, but so far, things have not advanced as desired.
India’s proposal to join the Malacca Strait Patrol made incremental progress after Singapore formally acknowledged it for the first time, the Institute of South Asian Studies noted in September 2025. However, the prospect of the Indian Navy patrolling the strait remained unlikely, it added.