India–Malaysia Strategic Reset under Act East Policy: From Symbolism to Outcomes

Prime Minister Narendra Modi’s February 7–8 visit to Malaysia marked a strategic reset, moving the partnership beyond symbolism toward digital, industrial, financial, and security convergence.

Evolution of the ‘Act East’ Policy

• From ‘Look’ to ‘Act’: India’s policy toward East Asia began in 1991 with the “Look East” policy, which focused on the region alongside the West.
  • In 2014, Prime Minister Modi converted this into the “Act East Policy,” shifting the focus from mere observation to active engagement.
• Three Pillars: The current policy is built on three specific areas of action- Connectivity, Commerce, and Culture.
• Strategic Geography: Malaysia sits at the Strait of Malacca, a critical “choke point” where 40% of global trade passes.
  • This location is vital for China’s energy supplies, making Malaysia a key partner for India’s regional interests.

The Diplomatic ‘Reboot’

• Past Strains: Relations were previously tense because Malaysia had sided with Pakistan on the Kashmir issue and offered to mediate between India and Pakistan, a red line for India.
  • The presence of Zakir Naik, wanted in India under the UAPA, also added strain.
• The 2026 Reset: PM Modi’s recent visit is described as a “reboot”.
  • Both nations agreed to move past old grievances and focus on a future-oriented partnership.

Key Outcomes of the India–Malaysia Meeting

• Semiconductor Partnership: India brings strength in chip design and fabrication expertise, while Malaysia specialises in packaging and testing, making the partnership a complementary end-to-end semiconductor ecosystem.
• Strategic Collaboration: The visit led to the formalisation of the Malaysia–India Digital Council.
  • An exchange of notes on semiconductors was signed to implement a “China Plus One” approach.
• Knowledge Diplomacy: IIT Madras is now linked with Malaysia’s Semiconductor Academy. This connects India’s tech hub (Chennai) with Malaysia’s tech hub (Penang) for joint training on the same technology architecture.
• UPI Integration: An agreement was signed to integrate India’s UPI with Malaysia’s PayNet.
  • This makes payments easier for tourists, students, and workers while reducing remittance costs.
• Local Currency Trade: The Reserve Bank of India and Malaysia’s central bank (Bank Negara) agreed to settle trade in Rupee and Ringgit rather than the US Dollar.
  • This reduces transaction costs for small businesses by eliminating double conversion fees and protecting them from dollar exchange-rate volatility.
• Sukhoi-30 Forum: Since both nations operate Russian-made Sukhoi-30 jets and Russia is currently engaged in war, a forum was created to share maintenance practices and spare parts.
• Joint Exercises: The Harimau Shakti exercise will continue, signalling that India and Malaysia are joint partners in securing the Strait of Malacca.
• Anti-Terrorism Cooperation: Both nations condemned cross-border terrorism. They agreed to share joint intelligence through the Financial Action Task Force (FATF).
• Cultural Connection: A Thiruvalluvar Centre will be established in Malaysia to connect with the significant Tamil diaspora.
• Tourism Gap: To address the imbalance where 1 million Indians visit Malaysia but only 300 Malaysians visit India, flight connectivity to Tier-2 cities is being expanded.
• CEO-Led Execution: Responsibility has been shifted from slow-moving bureaucracy to an India-Malaysia CEO Forum, ensuring faster implementation and preventing agreements from remaining on paper, particularly in green hydrogen (e.g., Gentari) and healthcare.
• BRICS Aspiration: During the visit, India noted Malaysia’s interest in joining BRICS but has not yet formally supported the bid.

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Conclusion

The India–Malaysia reset under the Act East Policy reflects India’s shift from declaratory diplomacy to outcome-oriented partnerships across technology, finance, security, and culture.