Modi in Malaysia: How Far Can India’s Act East Policy Go?
- Joydeep Chakraborty
- 8 hours ago
- 5 min read
This visit tells us where India is looking east, and why.
When the world’s fastest-growing major economy engages one of ASEAN’s most strategically located states, the stakes extend far beyond bilateral ties. Prime Minister Narendra Modi’s February 2026 visit to Malaysia is not a routine diplomatic stop. It is a strategic checkpoint that reveals where India’s Act East vision is headed, and how seriously Southeast Asia figures in that journey.
From Familiar Ties to Strategic Stakes
India–Malaysia relations have always carried a sense of familiarity. Civilisational links, cultural exchange, and people-to-people contact predate modern diplomacy by centuries. Formal ties were established in 1957, soon after Malaysia’s independence, but for decades the relationship remained cordial rather than consequential.
That has changed. From palm oil to microchips, India–Malaysia ties are being rewritten, and Modi’s Kuala Lumpur visit marks a decisive inflexion point. This is his first visit since the relationship was elevated to a Comprehensive Strategic Partnership in August 2024, and expectations now revolve around delivery, not declarations.
Malaysia today is no longer just another Southeast Asian partner. With a GDP of roughly USD 430 billion and ranking as ASEAN’s sixth-largest economy, it sits at the intersection of trade routes, technology supply chains, and regional diplomacy. For India, engaging Malaysia is a way of engaging ASEAN’s strategic core.
The Diaspora as Diplomatic Infrastructure
One reason the relationship has endured is human connectivity. Malaysia hosts a 2.9 million-strong Indian diaspora, which is the third largest globally. This community is not merely symbolic. It is embedded in Malaysia’s economy, politics, and cultural life, creating reservoirs of trust that formal diplomacy alone cannot manufacture.
Modi’s planned engagement with the diaspora during this visit is more than a ritual. It underscores how people-to-people ties function as strategic capital. Discussions on labour mobility, skill development, and education cooperation reflect a shared effort to make migration structured and mutually beneficial rather than ad hoc.
These social links have helped absorb shocks in the past. In 2019–2020, bilateral ties briefly cooled after political tensions led India to informally restrict Malaysian palm oil imports, which had accounted for over a third of India’s palm oil supply. Trade normalised eventually, but the episode left a clear lesson: diversification is strategic insurance.
Why Timing Matters Now
This visit tells us where India is looking east, and why. ASEAN’s relevance is being reassessed amid intensifying Indo-Pacific competition, supply chain realignments, and technological fragmentation. India’s Act East policy, once connectivity-focused, is now increasingly strategic.
Malaysia’s geography explains much of its appeal. Nearly 60 percent of India’s eastbound trade passes by Malaysia’s shores, primarily through the Strait of Malacca. For Indian planners, this is not an abstract statistic. A disruption there would ripple through Indian ports within days.
The Strait of Malacca rarely appears explicitly in joint statements, yet it hovers over every engagement. Malaysian officials see stability in the strait as existential. Indian naval planners see it as a strategic artery. This unspoken convergence explains the growing emphasis on maritime cooperation.
Economics Beyond Transactional Trade
Bilateral trade today stands at roughly USD 19.8–20 billion, nearly double what it was a decade ago. There has been a growth of around 90 percent since 2014–15! Malaysia is now India’s third-largest trading partner within ASEAN, which itself accounts for about 11 percent of India’s global trade.
Traditional sectors still dominate. Palm oil, petroleum products, chemicals, and machinery remain core trade items, with palm oil alone accounting for roughly 30–35 percent of India’s imports from Malaysia. Yet the direction of travel is shifting.
Electronics has emerged as the fastest-growing segment, registering double-digit growth. This shift matters because it aligns with both countries’ strategic priorities. India wants to move up the manufacturing value chain. Malaysia wants to remain indispensable to global electronics supply networks.
The review of the ASEAN–India Trade in Goods Agreement reflects this recalibration. Simplifying rules of origin, reducing non-tariff barriers, and incorporating digital trade provisions are not technical footnotes. They are prerequisites for keeping regional trade frameworks relevant in a digitised economy.
Semiconductors: Where Strategy Meets Silicon
The future of India’s Act East policy may well be assembled, tested and packaged, not in Silicon Valley, but in Malaysia’s semiconductor hubs. Malaysia accounts for about 13 percent of global semiconductor assembly, testing, and packaging capacity, making it a critical node in the global chip ecosystem.
India, meanwhile, imported over USD 30 billion worth of semiconductors in 2024 and has committed around USD 10 billion in incentives to build domestic capacity. The asymmetry is obvious, but so is the opportunity.
Proposed MoUs on semiconductor cooperation aim to integrate supply chains rather than duplicate them. Joint R&D, talent exchange, and technology transfer could help India shorten its learning curve while giving Malaysia deeper access to a fast-growing market. This is less about symbolism and more about strategic complementarity.
Defence Cooperation Grows Deeper
Defence ties between India and Malaysia have matured steadily, often outside the spotlight. Exercises like Harimau Shakti have improved interoperability, but the real shift lies elsewhere. Few noticed that recent military exchanges included discreet discussions on maintenance support for Malaysia’s Su-30 fighter fleet.
India’s long operational experience with the same platform made it a credible partner. The talks did not make headlines, yet they signalled a move from symbolic engagement to practical capability support. This is defence cooperation with substance.
Security dialogues now span counter-terrorism, cyber security, maritime domain awareness, and defence industry collaboration. Maritime cooperation, in particular, reflects shared concerns over freedom of navigation and non-traditional threats in the Indo-Pacific.
Maritime Logic, Strategic Reality
This is where geography hardens into strategy. Nearly 90 percent of Malaysia’s trade by volume moves by sea, underscoring its dependence on open and secure maritime routes. The Strait of Malacca is one of the world’s five busiest chokepoints, and its stability underpins regional economic health.
For India, maritime cooperation with Malaysia is a way to operationalise its Indo-Pacific vision without appearing confrontational. Both countries emphasise ASEAN centrality, respect for international law, and a rules-based order. This language signals reassurance rather than rivalry.
This convergence allows India to deepen security cooperation while remaining aligned with Southeast Asia’s preference for strategic autonomy.
Leadership, Trust, and Continuity
Prime Minister Anwar Ibrahim’s August 2024 visit to India was a turning point. Known as a reformist with a global orientation, Anwar used the visit to elevate ties to a Comprehensive Strategic Partnership, signalling Malaysia’s intent to rebalance its external relationships.
Modi’s reciprocal visit now completes that diplomatic arc. Leadership-level trust matters here because it sustains momentum beyond electoral cycles. It also creates space to manage sensitive issues, such as extradition-related concerns, through dialogue rather than public friction.
The broader trajectory suggests a shared preference for strategic maturity by addressing differences without allowing them to derail long-term objectives.
Track-Two Diplomacy and Quiet Engines
Alongside official talks, the coinciding 10th India–Malaysia CEO Forum highlights another layer of engagement. What began as a modest networking platform has, over time, facilitated partnerships in IT services, pharmaceuticals, and education.
Its presence during Modi’s visit underlines how economic diplomacy increasingly operates on parallel tracks. When political attention shifts elsewhere, these quiet mechanisms keep cooperation alive.
From Partnership to Purpose
This is Modi’s first visit to Malaysia since ties were elevated to a Comprehensive Strategic Partnership, and the real test begins now. Agreements on semiconductors, skill development, maritime training, healthcare, and disaster management will matter less for their wording than for their implementation.
The visit signals that India sees Malaysia not as a peripheral partner, but as a strategic hinge linking ASEAN centrality, Indo-Pacific stability, and economic transformation. For Malaysia, closer ties with India offer diversification amid great power competition and access to one of the world’s fastest-growing markets.
When the world’s fastest-growing major economy engages one of ASEAN’s most strategically located states, outcomes resonate well beyond the bilateral ledger. Modi’s Kuala Lumpur visit is a reminder that in today’s Indo-Pacific, geography, technology, and trust intersect quietly, but decisively.