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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 1986, 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 emerged as India’s second largest trading partner in the ASEAN after Singapore.
Bilateral trade since India initiated liberalization measures indicate that the two-way trade increased by 17 times since 1992 (US $ 0.6 billion) to 2008 (US $10.5 billion). Noticeably, in 2005, it crossed US$ 5 billion mark for the first time. The two-way trade more than doubled by 2008, as compared to figures in 2005. Matching the 2007 performance of US $ 8.14 billion (Indian exports US $2.1 billion and imports US $6.03 billion) or about 24% growth, the two-way trade during 2008 reached US $ 10.5 Billion registering 29%growth over 2007. The decline seen in 2009 was largely due to global economic slowdown. In early 2010, bilateral trade is showing signs of recovery.
The table below summarizes bilateral trade flows and growth rates from 1998 onwards.
Year |
India’s
Exports
(US$ mn) |
Growth rate (%) |
India’s Imports
(US$ mn) |
Growth rate (%) |
Balance of Trade
(US$ mn) |
Total Trade (US$ mn) |
Growth rate (%) |
1998 |
481.30 |
|
1774.40 |
|
-1293.10 |
2255.70 |
|
1999 |
529.00 |
9.98 |
2038.00 |
14.86 |
-1509.00 |
2567.00 |
13.80 |
2000 |
725.00 |
37.05 |
1925.00 |
(-) 5.54 |
-1200.00 |
2650.00 |
3.23 |
2001 |
772.42 |
6.54 |
1577.03 |
(-)18.08 |
- 804.61 |
2349.45 |
(-)11.34 |
2002 |
643.37 |
(-)16.71 |
1760.96 |
11.66 |
-1117.59 |
2404.30 |
2.33 |
2003 |
672.53 |
4.51 |
2510.93 |
42.59 |
-1838.40 |
3183.46 |
32.41 |
2004 |
1288.79 |
91.63 |
3002.75 |
19.58 |
-1713.96 |
4291.54 |
34.80 |
2005 |
1104.46 |
(-)15.00 |
3971.31 |
31.21 |
-2866.85 |
5075.77 |
17.34 |
2006 |
1356.69 |
22.84 |
5217.56 |
31.38 |
-3860.87 |
6574.25 |
29.52 |
2007 |
2108.54 |
55.42 |
6031.13 |
15.59 |
-3922.59 |
8139.67 |
23.81 |
2008 |
3105.9 |
47.3 |
7421.6 |
23% |
-4315.7 |
10,518.50 |
29.2 |
2009 |
2300.90 |
(-)26 |
4970.23 |
(-)33 |
(-)2669.33 |
7271.13 |
(-) 31% |
(Source: Department of Statistics, Malaysia)
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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 $ 3.1 billion in 2008. Indian exports during 2009 were US $ 2.3 billion, which marks -26% decreases over 2008, and that Indian exports in 2007 recorded a 55.42% growth over 2006.
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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 2003 onwards;
Indian Exports to Malaysia (Major commodity groups)
(Million US$)
|
Commodity Group |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
1 |
Food Items |
219.46 |
436.39 |
307.83 |
336.76 |
488.08 |
921.4 |
646.39 |
2 |
Beverage & Tobacco |
0.99 |
1.38 |
2.81 |
7.58 |
7.48 |
11.98 |
22.16 |
3 |
Crude Materials |
39.95 |
50.07 |
47.78 |
67.23 |
74.78 |
146.05 |
107.68 |
4 |
Mineral Fuels |
3.44 |
54.95 |
12.26 |
30.85 |
166.89 |
237.44 |
163.38 |
5 |
Animal & Veg. Oils |
2.35 |
7.05 |
7.58 |
11.63 |
22.73 |
126.39 |
25.66 |
6 |
Chemicals |
102.26 |
163.35 |
201.00 |
258.12 |
280.87 |
330.43 |
375.94 |
7 |
Manufactured Goods |
168.71 |
255.0 |
287.90 |
364.17 |
683.06 |
936.64 |
543.65 |
8 |
Machinery &Trans. Equipment |
89.61 |
253.35 |
165.57 |
205.72 |
290.98 |
400.19 |
291.01 |
9 |
Misc. Manufactures |
25.6 |
42.56 |
46.81 |
46.12 |
60.36 |
66.11 |
56.43 |
10 |
Other Misc. |
19.91 |
24.67 |
24.92 |
28.51 |
33.30 |
17.82 |
68.60 |
|
Total: |
672.5 |
1288.8 |
1104.5 |
1356.7 |
2108.5 |
3105.95 |
2300.90 |
Indian Imports from Malaysia (Major commodity groups)
(Million US$)
|
Commodity Group |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
1 |
Food Items |
11.57 |
18.98 |
37.12 |
27.38 |
30.07 |
29.36 |
31.87 |
2 |
Beverage & Tobacco |
1.00 |
1.23 |
1.57 |
3.24 |
4.84 |
4.61 |
5.27 |
3 |
Crude Materials |
179.05 |
183.10 |
223.03 |
219.73 |
263.24 |
1094.38 |
360.74 |
4 |
Mineral Fuels |
818.37 |
1061.29 |
1800.55 |
2765.28 |
2698.24 |
3559.54 |
1478.95 |
5 |
Animal & Veg. Oils |
720.63 |
460.43 |
288.03 |
261.35 |
372.07 |
754.19 |
840.21 |
6 |
Chemicals |
225.82 |
286.88 |
380.52 |
460.07 |
545.98 |
635.61 |
551.46 |
7 |
Manufactured Goods |
95.88 |
160.21 |
229.72 |
298.04 |
466.50 |
483.9 |
354.27 |
8 |
Machinery & Trans. Equipment |
394.30 |
750.58 |
885.60 |
1003.34 |
1436.23 |
1388.7 |
1048.66 |
9 |
Misc. Manufactures |
50.63 |
58.97 |
94.10 |
142.48 |
170.03 |
192.96 |
139.33 |
10 |
Other Misc. |
13.68 |
21.06 |
31.07 |
36.65 |
36.86 |
35.04 |
159.47 |
|
Total: |
2510.9 |
3002.8 |
3971.3 |
5217.6 |
6031 |
7412.61 |
4970.23 |
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