India, Malaysia ties deepen into semiconductors, local-currency trade

India’s Prime Minister Narendra Modi and Malaysian Prime Minister Anwar Ibrahim committed to boost bilateral trade and explore cooperation in semiconductors, defense, and other strategic sectors, during Modi’s two-day visit to Malaysia, according to an Information Ministry press release.

De-dollarization becomes functional: Bank Negara Malaysia and the Reserve Bank of India will operationalize a framework for INR-MYR invoicing and settlement in a push to promote local-currency trade settlement. For businesses, this means reduced forex conversion costs and a hedge against USD volatility in the USD 19.8 bn trade corridor.

Chip ambitions: Malaysia, which controls roughly 13% of global chip testing and packaging, is now a formal partner in India’s chip-making ambitions. This provides Indian firms like Tata Electronics — which was in talks to acquire Malaysian assets — with a direct line to 40 years of technical expertise to de-risk their domestic fabrication projects.

In the pipeline: The visit is Modi’s first since ties were elevated to a comprehensive strategic partnership in August 2024, concluding with 11 agreements.