India and Malaysia Strengthen Economic Ties: Bilateral Talks on Trade, Semiconductor Industry, and ASEAN Integration

Malaysia, a key member of the Association of Southeast Asian Nations (ASEAN) and the ASEAN Chair for the year 2025, plays a crucial role in the economic framework of the region.

The Union Minister of State for Commerce & Industry and Electronics & Information Technology, Shri Jitin Prasada, held a significant bilateral meeting with Mr. Liew Chin Tong, the Malaysian Deputy Minister of Investment, Trade, and Industry at Vanijya Bhawan, New Delhi. This high-level dialogue marked a renewed commitment to strengthening economic cooperation between the two nations, emphasizing trade relations, market access, and technology collaboration.

Strengthening ASEAN-India Trade Relations

Malaysia, a key member of the Association of Southeast Asian Nations (ASEAN) and the ASEAN Chair for the year 2025, plays a crucial role in the economic framework of the region. A primary focus of the meeting was the ongoing review of the ASEAN-India Trade in Goods Agreement (AITIGA). Both parties reiterated their dedication to expediting the AITIGA review process to ensure its substantial conclusion by 2025. The review aims to enhance trade liberalization, improve market access, and address tariff and non-tariff barriers to facilitate smoother trade flows between India and ASEAN nations.

Enhancing Bilateral Trade and Market Access

In addition to the AITIGA discussions, the two sides addressed various bilateral trade concerns. These included trade facilitation measures, tariff-related challenges, and issues affecting market access for key industries. The meeting sought to resolve regulatory bottlenecks and promote seamless trade between India and Malaysia.

Malaysia remains a critical trade partner for India, ranking as India’s third-largest trading partner in ASEAN. The total trade between the two nations stood at USD 20.02 billion in the financial year 2023-24, accounting for approximately 17% of India’s total trade with ASEAN countries. Both leaders emphasized the need to further enhance these figures by addressing trade restrictions and fostering investment-friendly policies.

Collaboration in the Semiconductor Industry

Given the growing global demand for semiconductors and India’s aspiration to become a key player in the global chip manufacturing ecosystem, the two sides discussed potential collaborations in the semiconductor industry. India is actively promoting investments in semiconductor fabrication, packaging, and research and development (R&D). Malaysia, with its established semiconductor industry and expertise in manufacturing and supply chain logistics, expressed interest in partnering with India on this front. Possible areas of collaboration include joint ventures, technology transfer, and supply chain integration to boost India's semiconductor ambitions.

Cooperation in the Service Sector

India and Malaysia have strong complementarities in the service sector, particularly in IT, digital economy, financial services, and tourism. The discussion explored opportunities for deeper cooperation, especially in digital trade, cybersecurity, fintech, and IT-enabled services. Malaysia’s growing role in the ASEAN digital economy aligns with India’s vision of becoming a global leader in IT and digital transformation, paving the way for increased collaboration in emerging technologies.

Foreign Manufacturers Certification Scheme (FMCS) and Standardization Issues

The meeting also addressed concerns regarding the Foreign Manufacturers Certification Scheme (FMCS) under the Bureau of Indian Standards (BIS). India’s regulatory framework requires foreign manufacturers to obtain certification to export certain goods into the Indian market. Malaysian officials raised concerns over certification procedures, seeking a streamlined and efficient process to facilitate trade. Both parties agreed to work towards mutual recognition of standards and reducing bureaucratic hurdles to ease the certification process.

Conclusion and Future Prospects

The discussions concluded on an optimistic note, with both sides expressing confidence that the meeting would accelerate the resolution of bilateral trade issues and contribute to expanding trade and investment opportunities. The commitment to finalizing the AITIGA review, fostering semiconductor industry collaboration, and addressing regulatory concerns underscores the shared vision of India and Malaysia to deepen economic ties.

As Malaysia continues its tenure as the ASEAN Chair for 2025, the outcomes of this bilateral meeting are expected to reinforce India-ASEAN cooperation and drive regional economic integration. Future engagements between trade and investment authorities of both countries will further enhance commercial ties, providing new opportunities for businesses and industries in both nations.

This bilateral dialogue sets the stage for a more robust economic partnership, reflecting the commitment of India and Malaysia to fostering mutual growth and prosperity in an increasingly interconnected global economy.