India-Malaysia Ties Deepen: From Semiconductors and Trade to Digital Payments (2026)

Semiconductors Take Centre Stage

Semiconductors are officially labelled “strategic” by both countries.

• Malaysia:

  • 6th largest semiconductor exporter globally

  • Semiconductor sector = ~25% of its GDP
    
    

• India:

  • Actively building domestic chip capacity

  • Sees Malaysia as a manufacturing and testing partner

    
    

What’s already happening:

• Collaboration between IIT Madras Global & Malaysia’s Advanced Semiconductor Academy

• Tata Electronics exploring chip fabrication and assembly opportunities in Malaysia

Trade: Bigger, But Smarter

• India exports to Malaysia: $7.3 billion

  • Engineering goods, petroleum products

• Imports from Malaysia: $12.5 billion

  • Minerals, palm oil, electrical machinery

Rupee-Ringgit Trade Settlement

• RBI and Bank Negara Malaysia expanding local currency settlement

• Trade invoicing in INR and MYR

• Benefits:

  • Lower transaction costs

  • Reduced dependence on USD

  • Less FX volatility

UPI Goes Global

• UPI to be introduced in Malaysia

• Partnership between NPCI International & PayNet Malaysia

• Enables:

  • Seamless payments for tourists

  • Easier remittances for students and SMEs

• Malaysia has the second-largest Indian-origin population globally

Defence & Security Cooperation Expands

• Stronger military-to-military engagement

• Joint mechanisms:

  • Strategic Affairs Working Group

  • Su-30 fighter aircraft forum

• Joint exercise Harimau Shakti shows operational alignment

• Zero tolerance on terrorism reaffirmed

Energy, Food & Climate

• PETRONAS and Gentari expanding presence in:

  • Renewables

  • Green hydrogen

  • Large-scale solar projects in India

• Palm oil:

  • Malaysia remains a reliable supplier

  • Focus shifting to value-added downstream products

The Bigger Picture

• Shared commitment to:

  • Free and open Indo-Pacific

  • Rules-based global order

• Malaysia supports:

  • India’s BRICS 2026 Chairmanship

  • India’s permanent seat at the UN Security Council
    
    

Pivot Money Takeaway

This partnership is not about announcements. It reflects where capital, technology and supply chains are quietly consolidating.

- Semiconductors are now a strategic necessity, not a policy choice.
- Digital payments are emerging as cross-border infrastructure.
- Trade is moving away from volume toward resilience and value creation.

India’s role is evolving from a large market to a reliable global partner for investment and growth.

At Pivot Money, we track how global partnerships shape long-term India investment opportunities and help NRIs align portfolios with India’s evolving trade, technology and policy landscape.

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