India has long been overlooked in its power strength, influence and role as the regional and global power and economic leadership equation, at the expense of the region and the world. The emergence now as a global economic powerhouse and a decisive balancing power in the Indo-Pacific has never been more pivotal, at the same time that China enters a prolonged period of economic deceleration and strategic friction.
For Malaysia and Southeast Asia, this transformation is not abstract, and India lies squarely at the forefront of their future economic and geopolitical net and interests, providing the pillar of stability and strength in economic resilience, security support, food and energy security, technology access, and strategic optionality.
Prime Minister Narendra Modi’s visit to Malaysia on 7 and 8 February therefore is strategically vital for both countries and especially for Malaysia – one in which Kuala Lumpur must think beyond traditional hedging and recognise India as a first-tier strategic partner of the coming decades.
India’s Economic and Demographic Miracle and Resilience
India in this year remains the fastest-growing major economy,according to the IMF, with projected real GDP growth of around 6.4%, against the backdrop when most advanced and large emerging economies are struggling to exceed even 3%. India’s nominal GDP has crossed USD 4 trillion. Based on IMF and World Bank medium-term projections, it is on track to surpass Japan and Germany within this decade and to be the world’s largest economy by the 2040s. This trajectory is based on credible achievements and growing internal factors, including a still growing massive internal market and a positive demographic dividend, sustained capital expenditure, rising manufacturing output,and a substantial shift from consumption-only growth to investment- and productivity-led expansion.
Over the past decade and especially under Prime Minister Modi, India has implemented structural reforms that many large democracies struggle to execute: a national goods and services tax (GST), unified bankruptcy frameworks, digital public finance systems, and large-scale infrastructure investment. These reforms have deepened foundational strength in the form of strengthened state capacity, reduced transaction costs, and improved capital allocation.
Demographic dividend remains India’s enduring advantage,especially as compared to China. As the world’s most populous country with a median age below 30, the labour force will continue to expand well into the 2040s, with a sustained pool of talents and human capital strengthening the workforce and for key sectors especially technology and defence industries. It also creates a sustained consumption base for expanding its domestic demand. China, by contrast, is ageing rapidly where its working-age population is shrinking and dependency ratios are rising, affecting productivity growth.
Demography defines the ceiling of national power and India’s ceiling is still rising while China’s is flattening. The balance-of-power reality in 2026 is that while China remains large and influential, it is also facing structural slowdown and rising risk profile. Debt levels are high, property markets remain fragile, and demographic decline is accelerating.
The World Bank projects China’s growth to decline from an estimated 4.9% (2025) to 4.4% (2026) and 4.2% (2027), describing this as part of an ongoing structural slowdown, which means China’s marginal contribution to growth weakens.
In the same context, India’s ascent becomes more than an economic story; it is both an economic and a hard power reality.
India’s rise offers a counter-weight without confrontation.
Why Modi’s Act East and Made in India Policies Benefit Malaysia and Southeast Asia
Prime Minister Modi’s Act East Policy since 2014, was a strategic outline that repositioned India as a resident Indo-Pacific power with a long-term stake in Southeast Asia’s security and prosperity. In deepening integration, connectivity and a stake in the future resilience and security support of the region, Southeast Asia has reaped the benefits of a stronger counterbalance and the full force of India’s economic and security umbrella. The policy has re-centred ASEAN and the wider maritime domain discussion from the Andaman Sea to the Strait of Malacca – as a theatre where India must be strategically present, and this provides a new reassuring presence to the region facing renewed risks and tensions.
While Act East expands India’s strategic depth into Southeast Asia; Made in India increases India’s economic centrality, where both play a synergising role and become both a market and manufacturing partner and a security contributor and assurance.
Made in India has helped rebuild the economic base, not built only on services or consumption but by an expanded industrial policy and productive capacity. The subsequent impact with a stronger Indian manufacturing ecosystem will benefit Southeast Asia, creating alternative nodes of production, and strengthening regional supply chains.
The feat and concept of Digital India, where it remains the most scalable digital economy, completed the wave of India’s digital transformation. This system lowers transaction costs, enables financial inclusion, supports small businesses, and provides the foundation for rapid deployment of the new financial platforms of AI, fintech, and digital government services.
For Malaysia and ASEAN, India’s digital ecosystem offers new models for low-cost digital inclusion,opportunities for fintech, cybersecurity, and scalable infrastructure for digital trade.
In the sphere of start-ups and technological capacity, India now hosts over 200,000 registered start-ups spanning fintech, healthtech, defence tech, AI, and space applications, being one of the world’s largest innovation ecosystems.
Renewed investments and focus on strategic sectors especially on semiconductor will provide a complementary parallel benefit to Malaysia, where already a critical node in the global semiconductor supply chain, Kuala Lumpur will reap the benefits in the areas of advanced packaging and testing,chip design ecosystems,and AI-enabled industrial processes. This partnership is not duplicative, as India brings scale and demand. While Malaysia brings integration and manufacturing depth.
In the areas of new sectors and energy transition, India’s growth trajectory makes it one of the world’s largest future markets for renewable energy, energy storage, green hydrogen,and grid modernisation.When this transition progresses, a larger pool of openings exist for joint investment, technology transfer, and supply chain diversification.
For Malaysia, this will strengthen and complement the country’s existing energy transition and digital economic transformation. Malaysia’s future growth depends on moving up the value chain, escaping the middle income and export oriented trap, attracting high-quality investment, and integrating into resilient supply networks. India offers strategic solutions for the gaps in market scale, industrial partnerships, and investment flows aligned with these goals.
Food security remains one of the core foundational strength for Malaysia- India ties, and in 2024, India approved a one-off export of 200,000 metric tons of non-basmati rice to Malaysia, making an exception despite restrictions on such exports and showcasing it as a stabilising partner when supply chains tighten.
Deepening Strategic Trade Ties
Bilateral trade has nearly doubled since the last decade, reaching around USD 19–20 billion annually by the last two years, making Malaysia one of India’s top trading partners in ASEAN and India being Malaysia’s most important partner in South Asia.
Malaysia’s exports are mainly on electronics, semiconductors, palm oil, chemicals, and petroleum products, while India supplies refined petroleum, pharmaceuticals, machinery, iron and steel, food products, and IT-enabled services to Malaysia.
Most crucially, India has consistently been among the largest importers of Malaysian palm oil, creating a large and stable downstream market. The supply of pharmaceutical exports has been crucial and critical for Malaysian consumers, giving Malaysia’s healthcare the advantage of affordability and resilience.
As India’s economy projection is projected to rise towards USD 7 trillion by 2030 and its middle class expanding with additional hundreds of millions of people, Malaysia will benefit in key sectors including electronics, digital trade, energy products, and agri-commodities that will turn the India–Malaysia trade corridor into one of the most sturdy and vibrant growth channels linking both regions of South Asia and Southeast Asia in new decades.
People to People Ties and Soft Power
People to people ties through tourism, cultural exchanges, soft power, education and scientific collaborations, among others, form the parallel driveways.
India–Malaysia relations rest on a societal foundation unmatched by most other partnerships, tied by trust and durability and shared appreciation of one another’s soft power strength. From Bollywood to education and languages, both shared an interconnected bond.
For decades, Indian universities have served as the training ground for large numbers of Malaysian students in key sectors including medicine, dentistry, engineering, and technology, thus creating deep alumni networks that naturally strengthen bilateral ties.
India’s growth as a science and technology power has now seen it being among the world’s largest producers of STEM graduates, and coupled with an explosive start-ups ecosystem, providing further integration and partnerships through talent exchanges and knowledge transfers.
Key strength areas for both countries are now more deeply capitalised upon. Malaysia’s public health and bio-innovation programs can link with India’s biomedical capacity; and Malaysia’s climate and disaster resilience research can integrate with India’s space science and earth-observation strengths, tapping into the growing prowess and niche areas of both nations.
A Stabilising Power with Defence Support in Maintaining Stability
With rising tensions and threats facing the region, Malaysia will be boosted by the deeper role played by India in providing peace and stability in the region through its power projection and security assurances.
India’s military power has expanded notably under Prime Minister Modi, transforming India from a largely defensive force into a credible, multi-domain deterrent power in the Indo-Pacific. India is now the world’s 5th-largest military spender, with defence expenditure exceeding USD 80–90 billion annually, up by more than 40% compared to a decade ago.
Being a blue-water navy with two aircraft carriers,(INS Vikramaditya and the indigenous INS Vikrant), a growing fleet of destroyers, frigates and corvettes, and a nuclear-powered ballistic missile submarine capability, India provide the region with both reach and volume in joint deterrent capacity. The Navy conducts sustained deployments across the Indian Ocean, the Andaman Sea and increasingly toward the Strait of Malacca, displaying India’s role as a guardian of critical sea lanes.
Its strategic posture is defensive and stabilising, and Malaysia and the region will benefit from India’s capacity in protecting sea lanes, deterring coercion, and preventing regional domination by any single power.
The Indian Air Force (IAF) is among the world’s largest, operating over 1,700 aircraft, including advanced multirole fighters such as the Rafale, upgraded Su-30MKI, Mirage-2000 and indigenous Tejas platforms, supported by airborne early-warning systems and platforms.
Together, India’s air and naval capabilities provide power projection, sea-lane security, and strategic deterrence, in a maritime-air power hybrid – a capability profile that is uniquely stabilising and needed for Southeast Asia and Malaysia, which depend fundamentally on open skies, secure sea lines of communication, and a free and open Indo-Pacific.
India’s strengthened military posture further bolsters the current regional security architecture that has struggled to keep up to meet the demands of deterrent capacity in protecting key national interests and territorial integrity and in upholding the sanctity of international law and maritime law. India’s stabilising presence will add further trust and combined deterrent effects, advancing regional confidence and building more capacities through joint training, interoperability cohesion and drills.
This is crucial amidst growing grey zone pressures and power asymmetries and this will help to reinforce maritime domain awareness and reduce risks of escalations.
Exercises and cooperation with the militaries of both India and Malaysia remain the strategic frontline of confidence and strength, including the flagship Harimau Shakti exercise in building interoperability, operational familiarity, and joint readiness.
India’s growing focus in maintaining open sea lanes across the Indian Ocean and through the Strait of Malacca as also part of the Diamond of Necklace strategy aligns directly with Malaysia’s maritime security interests and needs.
A Shared Future
India’s current and future role and impact have never been more profound and integral. Its rise coincides with China’s structural slowdown, reshaping Asia’s balance.
For Malaysia, the choice is not between India and others. It is between either preparing early for India’s ascent or adjusting late. Both nations share similar future challenges and potential.
Prime Minister Modi’s visit is a strategic inflection point in creating a new wave of resonating ties with interwoven benefits in a multi-faceted partnership based on history, trust and shared future aspirations. Deepening ties with India in defence, technology, semiconductors, energy, food security, education, and culture is not merely prudent, but forming the key foundational essence for the region and Malaysia’s long-term prosperity, security, and autonomy.
