Recently, Indonesian President Prabowo Subianto was the chief guest at India’s 76th Republic Day, marking the fourth such visit by an Indonesian leader.

India-Indonesia Relations

• Historical Significance: Indonesia’s founding father, President Sukarno, was the chief guest at India’s first Republic Day in 1950. The longstanding relationship reflects shared values of democracy, economic collaboration, and regional security.
• Strategic Growth: The relationship has expanded beyond historical and cultural ties to include trade, maritime security, and technology. Both nations, as major economies in the Indo-Pacific, play a critical role in regional prosperity and security.
• Trade Agreements: The India-Indonesia trade agreement, signed in 1966, laid the foundation for economic cooperation. However, current trade relations have significant room for expansion.

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• Key Sectors: The India-Indonesia CEOs Forum, co-chaired by Indonesian Chamber of Commerce Chairman and Indian business leader Ajay S. Shriram, identified five key sectors for mutual growth:
  • Energy: Renewable energy collaboration to ensure energy security.
  • Food and Agriculture: Enhancing agricultural trade and food security.
  • Healthcare: Strengthening pharmaceutical and medical cooperation.
  • Manufacturing: Boosting industrial and production synergies.
  • Technology: Advancing digital transformation and AI-driven solutions.
• Economic Partnership: Bilateral trade between India and Indonesia stands at just under $30 billion, with ambitions to quadruple trade volume in the next 10 years. 
  • India and Indonesia’s economic confidence in each other is reflected in their ambitious growth targets and expanding cooperation.
  • India and Indonesia are expected to grow at 6.5% and 5.1%, respectively, in 2025—outpacing the global average of 3.3%.
• Growth Drivers: Expanding markets and young, dynamic workforces and rising consumer demand, contributing to sustained economic resilience.
• Trade Opportunities: Despite growing trade, current investments are modest compared to potential:
  • Indonesian investment in India: $653.8 million.
  • Indian investment in Indonesia: $1.56 billion.
  • Deepening investment in clean energy, technology, and manufacturing can enhance supply chains and create new growth opportunities.
• Maritime Security: The Comprehensive Strategic Partnership (2018) has led to increased defensive cooperation, particularly in maritime security.
• Counterterrorism and Cybersecurity: Prime Minister Narendra Modi and President Prabowo Subianto agreed to enhance cooperation in counterterrorism and cybersecurity. Addressing cyber threats, terrorism, and transnational crimes is critical for regional and global security.
• Geopolitical Significance: As two large and populous nations, India and Indonesia play a crucial role in shaping the Indo-Pacific’s geopolitical landscape. Strategic collaboration ensures stability and prosperity for future generations.
• Entry into BRICS: In 2024, Indonesia was formally invited to join BRICS, aligning it with India, China, and other emerging economies. 
  • This move enhances Indonesia’s role in global economic governance and strengthens India-Indonesia cooperation within BRICS.
• Balancing Alliances: Both India and Indonesia maintain strong ties with the U.S. and Western economies, while also engaging in BRICS and the Indo-Pacific framework. 
  • The evolving U.S. trade policy under President Donald Trump’s administration—including potential new tariffs—could impact Indonesia’s resource exports. 
  • Indonesia, a key global supplier of nickel, copper, tin, and bauxite, seeks greater access to markets like India, the U.S., and Europe.
• Enduring Partnership: India and Indonesia share a 76-year-old diplomatic relationship that has expanded in trade, security, and geopolitics. President Prabowo Subianto’s visit to India reinforced the growing strategic significance of the partnership.

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Conclusion

India-Indonesia relations are set to play a vital role in global geopolitics and trade. By balancing multilateral cooperation (BRICS, ASEAN, Indo-Pacific) with strong economic policies, both nations can drive regional and global prosperity.

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