India and Malaysia bolster ties with focus on defense and semiconductor cooperation

PUTRAJAYA, Malaysia — Indian Prime Minister Narendra Modi and Malaysian Prime Minister Anwar Ibrahim met Sunday to pledge a deeper commitment to the Comprehensive Strategic Partnership established between the two nations in August 2024.

The leaders agreed to expand cooperation across several key sectors, including trade, investment, food security, defense, health, and tourism. During the meeting, officials exchanged 11 cooperation agreements covering areas such as disaster management and peacekeeping operations.

Anwar expressed optimism that bilateral trade would surpass last year’s $18.6 billion. To facilitate these economic ties, both nations plan to promote the use of local currencies for cross-border payments.

Malaysia also agreed to support India in opening a new consulate in the state of Sabah.

Semiconductor cooperation emerged as a central focus of the talks. Modi emphasized building partnerships in the semiconductor sector alongside AI and digital technology.

Malaysia currently ranks as the world’s sixth-largest semiconductor exporter.

The recent summit between Indian and Malaysian leadership transcends routine diplomacy, signaling a decisive realignment in the global high-tech supply chain. By prioritizing semiconductor cooperation, New Delhi and Kuala Lumpur are formalizing a strategic technological axis—one born of the shared necessity to build resilient manufacturing hubs independent of China.

For the broader region, the synergy between Malaysia’s mature semiconductor ecosystem and the scale of the ‘Make in India’ initiative presents a formidable challenge to regional peers. This partnership creates a powerful counterweight that exerts direct competitive pressure on countries like Vietnam, which has been aggressively courting foreign direct investment (FDI) to anchor its own chip-packaging and assembly ambitions. The concern for Hanoi is that capital and technical expertise, which might have otherwise flowed toward Vietnamese manufacturing hubs, could now be diverted to this burgeoning Indo-Malaysian corridor.

Geopolitically, the deepening of defense and maritime security ties between these two maritime nations further solidifies the network of "like-minded" states within the Indo-Pacific. While this contributes to a more diversified regional security architecture, it also raises the stakes for Vietnam. As the race for high-tech dominance intensifies, Hanoi must monitor these developments closely. To maintain its edge, Vietnam will likely need to implement more agile and aggressive policy frameworks to ensure it remains a primary destination for the next wave of global tech investment.