India-Malaysia economic and commercial relations have expanded significantly since 1991. Today, there are 61 Indian joint ventures in sectors ranging from palm oil refining, power, railways, civil construction, training and information technology. 67 Indian IT companies enjoy Multimedia Super Corridor (MSC) status in Malaysia. There are about 20 Indian other companies in various manufacturing sectors.

5. Bilateral trade flows have also expanded and currently, India is Malaysia’s largest trading partner in the South Asian region, while Malaysia is India’s second largest trading partner in the ASEAN. In 2006, bilateral trade reached a record US$ 6.58 billion, registering a growth of approximately 22.84% over the preceding year. During the last 14 years, India-Malaysia trade has increased ten-fold.

6. India’s imports from Malaysia grew by a modest 6.59% between 1998 and 2002, but thereafter increased by 42.6% in 2003, on the back of high prices for petroleum and palm oil. During 2004, imports grew by a more modest 19.58%, reducing the trade deficit marginally, before taking off in 2005 and 2006 with a phenomenal over 30% growth. Malaysia has traditionally enjoyed a handsome surplus, of between US$ 1 billion to US$ 1.5 billion, in its trade with India. In 2004, India’s trade deficit was to the tune of US$ 1.8 billion, which jumped to US$ 2.87 billion in 2005 and US$ 3.86 billion in 2006. Trade between India and Malaysia has expanded rapidly from US $ 0.6 million in 1992 to US $ 4.3 billion in 2004, US $ 5.1 billion in 2005 and US$ 6.58 billion in 2006. The balance of trade has favoured Malaysia, primarily because we are large importers of palm oil and petroleum. However, our exports have increased steadily to US $ 672.5 million in 2003 and US $ 1.3 billion in 2004, an increase of 98%. However, the trend could not be sustained in 2005, with exports registering a 15 % decline to US $ 1.1 billion as against the comparable figure for 2004. Overall trade has, however, registered an increase thereafter by 17.34 % and 29.52% in 2005 and 2006 respectively. Indian exports registered a growth of 22.84% in 2006 amounting to US$ 1.356 billion.

India’s export basket to Malaysia is large and diversified, including meat and meat preparations, sugar, rice (other than basmati), wheat, fresh vegetables and fruits, cotton yarn, RMG cotton and accessories, primary and semi-finished iron, made-ups, fabrics, machinery and instruments, electronic goods and metal manufactures. Malaysia’s major exports to India during 2006 were Crude Petroleum, Palm Oil, Electronic & Electrical products, Chemicals & Chemical products and Petroleum products.

Malaysia is the 18th largest investor in India. For the period August 1991 to January 2007, actual Malaysian investments in India total US$ 142.42 million. India is the 7th largest investor in Malaysia. The actual Indian investments in Malaysia are estimated at US$ 537.18 million.

Cooperation between Malaysia and India has acquired significant impetus during the last few years especially in infra-structure sector. Malaysian construction companies have completed 39 projects worth US$ 1506.37 million and are currently engaged in 18 projects worth US$ 1.8 billion in India. Likewise, Indian public sector undertakings have an impressive track record in implementing projects in Malaysia. IRCON has executed 11 major railway projects valued at US$ 183 million; BHEL has completed 15 power projects on turnkey basis and supplying power transmission equipment and spare parts to Malaysian power projects since 1972. Malaysian first Advanced Training Centre (ADC) was established by HMT in 1988.

India-Malaysia defense links date back to the colonial period when the British Indian Army served in Malaya and Singapore and some officers from the Federated Malaya States were trained in the Indian Military Academy (IMA).

Exchange of high level visits between the Defense Ministries and the Services of the two countries has been regular. The Deputy Prime Minister and Defense Minister Najib visited India in June 2006, Chief of Malaysian Army visited in December 2006 and the Malaysian Chief of Air Force visited in February 2007. From the Indian side, MOS Shri Rao Inderjeet Singh visited in April 2006, Air Chief Marshal S.P. Tyagi in February 2006, Shri Shekhar Dutt, Defense Secretary in September 2006 and Lt. General D.S. Bartwal, Director General Military Intelligence in December 2006.

The first MoU on Defence Cooperation between India and Malaysia signed in 1993 provided for widening the scope of bilateral cooperation to include joint ventures, joint development projects, procurement, logistics and maintenance support and training of the Malaysian defense personnel in India at various levels, including at the National Defence College and Staff College. India has been a regular participant at the Langkawi International Maritime and Aerospace Exhibition. Indian Naval ships frequently visit Malaysian ports.

Set up under the provisions of the MOU, the Malaysia-India Defense Cooperation Meeting (MIDCOM), co-chaired by the Defense secretaries was to be convened annually. However, only five meetings have been held so far. The last MIDCOM was held on Sept 18-19, 2006. The Meeting identified the following areas for intensified cooperation:

• Availability of courses on either side;
  
• Exchange of military observers to witness training exercises;
  
• Exchange of instructors in military training establishments;
  
• Exploration of possibility by India to provide assistance to Malaysia in capacity buildingwith regard to patrolling of the Straits of Malacca; and
  
• Setting up a Regional Maritime Training Centre within the framework of ARF.
  

A bilateral agreement on cooperation in the field of Science and Technology was signed in September 1998. India-Malaysia Joint S&T Committee was established and its first meeting took place in New Delhi on March 1-2, 2001. A joint workshop on Advanced Materials was organized by National Metallurgical Laboratory, Jamshedpur and SIRIM, Malaysia on March 12-13, 2002.

In May 2001, two MoUs on Cooperation in Space Technology were signed between Antrix Corporation and Astronautic Technology (M) Sdn. Bhd. (ATSB) and Binariang Satellite Systems Sdn. Bhd. In December 2004, during PM Badawi’s visit, an agreement was signed between Antrix Corporation and MEASAT Satellite Systems Sdn Bhd of Malaysia to jointly produce a satellite and market its capacity in Southeast Asia region. Two private-to-private agreements were also signed during the visit to promote cooperation in education and research in biotechnology in Malaysia. An MoU on Cooperation and Collaboration in the field of Traditional Systems of Medicine/Homeopathy is under negotiation.

There are over 1.9 million people of Indian origin in Malaysia, possibly the largest PIO community outside the Indian sub-continent. Organized Indian immigration to Malaysian peninsula began with the establishment of the East India Company stationed in Penang in 1786. They consisted of Tamils (who together with Malayalis and Telugus constitute over 85% of the total), Punjabis (mostly Sikhs) and small number of Bengalis, Sindhis, Gujaratis and others. The majority of people of Indian origin came to Malaysia as plantation labourers, and this remains the single largest group even today. However, they are more than proportionately represented in the teaching, medical and legal professions. For instance, more than 30% of the lawyers and doctors in Malaysia are Malaysian Indians. In the private sector, Indians are mostly in the retail business and sundry services. It may be noted that people of Sri Lankan (Sinhalese and Tamil), Pakistani and Bangladeshi origin are included in the category “Indians” for statistical purposes.

There are several PIO associations in Malaysia, often based on the states they come from. The Malaysian Indian Congress, the oldest political party in Malaysia (formed in 1946), is a partner in the ruling National Front. Dato' Seri S. Samy Vellu, Minister of Works in the Federal Government is the President of MIC. He has been conferred with "Bharatiya Samman Award" during Pravasi Bharatiya Divas in January 2003 held at New Delhi by Government of India for his outstanding contribution towards betterment of Malaysian Indians. MIC has 9 MPs. The other main Indian Parties are- the People's Progressive Party (PPP)(a pre-dominantly Indian party although multi-racial in character), which has a single MP, Datuk M. Kayveas, who is represented in the federal Cabinet as Deputy Minister and Indian Progressive Front, which supports the BN from outside. Minor Indian parties are Malaysian Indian Muslim Congress (KIMMA) and Parti Panjabi Malaysia.

There are approximately 1,50,000 Indian workers and expatriates in Malaysia. Indian expatriates have formed a Bharat Club in Kuala Lumpur. This is becoming a useful focal point for the increasing number of Indian expatriates who are coming to Malaysia for work as IT professionals, engineers, and doctors and in the joint ventures and overseas subsidiaries set up by Indian companies in Malaysia.