India-Malaysia Economic and Commercial Relations

India and Malaysia have had long-standing commercial links dating to the pre-Christian era. In modern times, Indian industry has been associated for four decades with the transformation of Malaysia from an exporter of primary products into an industrialized and broad-based economy. The first Indian joint venture, Godrej commenced operations in 1968, and in the seventies and early eighties Malaysia hosted the largest number of Indian joint ventures in any country. Indian companies present involvement in Malaysia is in palm oil refining, power, railways, information technology, bio-technology, manufacturing industrial goods, higher education, civil construction, and training.

Spectacular progress of the Malaysian economy since the late eighties, the new self-confidence of Malaysian entrepreneurs, and the liberalization of the Indian economy since 1991 have triggered new dimensions in bilateral commercial and economic relations.

India and Malaysia are mutually important economic partners. Malaysia is India’s second most important trading partner amongst the ASEAN countries and also India’s gateway to ASEAN and China. India is the largest trading partner for Malaysia in South Asia. 

Trade

India is Malaysia’s largest trading partner among countries of the South, excluding ASEAN and China. Similarly, Malaysia has now emerged as India’s second largest trading partner in the ASEAN after Singapore.  

Bilateral trade continues in 2007 touched US $ 8.14 billion (Indian exports US $2.1 billion and imports US $6.03 billion) or about 24% growth over the 2007 figures. The two-way trade during the first eight months [Jan-Aug] of 2008 has registered US $ 9.1 billion marking 34% growth over the corresponding period in 2007.

India-Malaysia two-way trade since India initiated liberalisation measures in 1992 (US $ 0.6 billion) increased by 14 times by 2007.  Noticeably, in 2005, it crossed US$ 5 billion mark for the first time. Significantly, the two-way trade would double by 2008, as compared to figures in 2005.

The table below summarizes bilateral trade flows and growth rates from 1998 onwards.

(Source: Department of Statistics, Malaysia)

 Malaysia has traditionally enjoyed a surplus primarily because India is a large importer of palm oil and petroleum.  However, India’s exports to Malaysia have increased steadily from US $ 672.5 million in 2003 to US $ 2.1 billion in 2007. Indian exports during the Jan-Aug 2008 were US $ 2.1 billion, which marks 72% increase over the corresponding period in 2007, and that Indian exports in 2007 recorded a 55.42% growth over 2006.

On the import side, the basket from Malaysia includes palm oil, petroleum, electronic goods, wood and wood products, organic chemicals, man-made fabrics, spun yarn, non-ferrous metals and machinery.

Product/commodity-wise break-up of Indian exports/imports to/from Malaysia from 2002 onwards:

Indian Exports to Malaysia (Major commodity groups)                                                                                                                      (Million US$)

Indian Imports from Malaysia (Major commodity groups)
(Million US$)