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Abstract

India established diplomatic relations with the Federation of Malaya (the predecessor state of Malaysia) in 1957. Since then, India and Malaysia have developed close political, economic, and socio cultural relations. Malaysia hosts the third-largest Person of Indian Origin (PIO) community in the world, following the US and UAE. As of 2022, which marked 65 years of diplomatic ties, there is a growing engagement in all aspects of the bilateral relationship, particularly in the economic sphere. Malaysia is India’s 13th largest trading partner, while India ranks among the top ten trading partners globally. Additionally, Malaysia has emerged as the third-largest trading partner for India within the ASEAN region. Bilateral trade reached USD 20.02 billion in 2023-24, comprising USD 7.27 billion in exports from India and USD 12.75 billion in imports. This study explores the evolving economic partnership between India and Malaysia in the 21st century, focusing on the dynamics of trade and investment. Utilizing secondary data, the paper examines the growth trajectory, key sectors, challenges, and future prospects of bilateral economic relations. The analysis underscores the significance of strategic collaborations, policy initiatives, and the role of digital infrastructure in fostering deeper economic integration between the two nations.