India has long been underestimated in terms of its power, influence, and role in shaping regional and global economic leadership. Today, its emergence as a global economic powerhouse and a decisive balancing force in the Indo-Pacific has never been more consequential—particularly as China enters a prolonged phase of economic deceleration and strategic friction.

For Malaysia and Southeast Asia, India’s transformation is not abstract. India now lies squarely at the centre of their future economic and geopolitical interests, providing a critical pillar of stability through economic resilience, security support, food and energy security, technology access, and strategic optionality.

Prime Minister Narendra Modi’s visit to Malaysia on 7–8 February is therefore strategically vital for both countries—especially for Malaysia. It is a moment for Kuala Lumpur to move beyond traditional hedging and recognise India as a first-tier strategic partner for the coming decades.

India’s Economic Resilience

India remains the world’s fastest-growing major economy, according to the IMF, with projected real GDP growth of around 6.4%—at a time when most advanced and large emerging economies struggle 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 potentially become the world’s largest economy by the 2040s. This trajectory is underpinned by credible achievements: a vast and expanding domestic market, a strong demographic dividend, sustained capital expenditure, rising manufacturing output, and a decisive shift from consumption-led growth to investment- and productivity-driven expansion.

Over the past decade, particularly under Prime Minister Modi, India has implemented structural reforms that many large democracies struggle to execute—such as the nationwide Goods and Services Tax (GST), unified bankruptcy frameworks, digital public finance systems, and massive infrastructure investments. These reforms have strengthened state capacity, reduced transaction costs, and improved capital allocation.

Demographics remain India’s enduring advantage, especially in comparison with China. As the world’s most populous country, with a median age below 30, India’s labour force will continue expanding well into the 2040s. This sustained pool of human capital strengthens key sectors, particularly technology and defence, while also supporting domestic consumption.

China, by contrast, is ageing rapidly. Its shrinking working-age population and rising dependency ratios are constraining productivity growth. Demography defines the ceiling of national power—and while India’s ceiling continues to rise, China’s is flattening.

The balance-of-power reality in 2026 is that while China remains influential, it faces structural slowdown, high debt levels, fragile property markets, and accelerating demographic decline. The World Bank projects China’s growth to fall from 4.9% in 2025 to 4.2% by 2027, reducing its marginal contribution to global growth.

Against this backdrop, India’s ascent is not merely an economic story—it is a hard-power reality that offers a counterweight without confrontation.

Regional Opportunity

Prime Minister Modi’s Act East Policy, launched in 2014, repositioned India as a resident Indo-Pacific power with a long-term stake in Southeast Asia’s security and prosperity. By deepening integration, connectivity, and security engagement, the policy has enhanced regional resilience while providing a stabilising counterbalance amid rising geopolitical risks.

Act East has re-centred strategic attention on the maritime domain—from the Andaman Sea to the Strait of Malacca—where India’s presence reassures a region facing renewed tensions.

Complementing this is the Made in India initiative, which enhances India’s economic centrality. Together, these policies position India simultaneously as a manufacturing partner, market, and security contributor. Made in India has rebuilt productive capacity beyond services and consumption, strengthening manufacturing and industrial ecosystems. For Southeast Asia, this creates alternative production nodes and more resilient supply chains.

India’s digital transformation under Digital India has further reinforced this momentum. As one of the world’s most scalable digital economies, India has lowered transaction costs, expanded financial inclusion, empowered small businesses, and laid the groundwork for AI, fintech, and digital governance.

For Malaysia and ASEAN, India’s digital ecosystem offers models for low-cost inclusion and opportunities in fintech, cybersecurity, and digital trade infrastructure.

India now hosts over 200,000 registered start-ups across fintech, healthtech, defence technology, AI, and space—making it one of the world’s largest innovation ecosystems. Its renewed focus on strategic sectors, particularly semiconductors, creates strong complementarities with Malaysia, already a critical node in the global semiconductor supply chain. Malaysia stands to benefit in advanced packaging, testing, chip design ecosystems, and AI-enabled manufacturing.

This partnership is not duplicative: India brings scale and demand; Malaysia contributes integration and manufacturing depth.

India’s energy transition also presents opportunities. As one of the world’s largest future markets for renewable energy, energy storage, green hydrogen, and grid modernisation, India opens avenues for joint investment, technology transfer, and supply-chain diversification—complementing Malaysia’s own energy and digital transitions.

Food security further anchors bilateral ties. In 2024, India approved a one-off export of 200,000 metric tonnes of non-basmati rice to Malaysia—despite export restrictions—demonstrating its role as a stabilising partner during supply-chain stress.

Trade, People-to-People Ties         

Bilateral trade has nearly doubled over the past decade, reaching USD 19–20 billion annually. Malaysia is now among India’s top ASEAN trading partners, while India is Malaysia’s most important partner in South Asia.

Malaysia exports electronics, semiconductors, palm oil, chemicals, and petroleum products, while India supplies refined petroleum, pharmaceuticals, machinery, steel, food products, and IT-enabled services. India remains one of the largest importers of Malaysian palm oil, providing a stable downstream market, while Indian pharmaceuticals have enhanced affordability and resilience in Malaysia’s healthcare system.

As India’s economy moves toward USD 7 trillion by 2030 and its middle class expands by hundreds of millions, Malaysia stands to benefit across electronics, digital trade, energy, and agri-commodities—turning the India–Malaysia corridor into one of the most dynamic links between South and Southeast Asia.

People-to-people ties further reinforce this partnership. Education, tourism, cultural exchange, and scientific collaboration form a deep societal foundation. Indian universities have long trained Malaysian students in medicine, engineering, and technology, creating durable alumni networks. India’s growing strength in STEM and innovation now enables deeper talent exchanges and knowledge partnerships.

In security terms, India’s expanded military capabilities have transformed it into a credible multi-domain deterrent in the Indo-Pacific. As the world’s fifth-largest defence spender, with a blue-water navy, advanced air force, and sustained regional deployments, India contributes directly to maritime security and the protection of sea lanes critical to Malaysia’s interests.

Joint exercises such as Harimau Shakti enhance interoperability and confidence, reinforcing maritime domain awareness and reducing escalation risks amid growing grey-zone pressures.

Reshaping Asia 

India’s rise coincides with China’s structural slowdown, reshaping Asia’s strategic landscape. For Malaysia, the choice is not between India and others—but between preparing early for India’s ascent or adjusting late. Prime Minister Modi’s visit represents a strategic inflection point. Deepening ties in defence, technology, semiconductors, energy, food security, education, and culture is not merely prudent—it is foundational to Malaysia’s long-term prosperity, security, and strategic autonomy.

(The author is a Kuala Lumpur-based strategic and security analyst. Views expressed are personal. He can be contacted at collins@um.edu.my.)