NE BUSINESS BUREAU
CHENNAI, FEB 3
Trade between Malaysia and India dropped during January – December 2023, but it is expected to grow in 2024 in a modest way, said the Chennai office of the Malaysian External Trade Development Corporation (MATRADE).
“MATRADE’s objective in Chennai is to strengthen Malaysia’s exports to southern part of India. As India is aspiring to become 3rd largest economy by 2027, the country offers huge potential in exports and imports for the Malaysian companies,” states Wan Ahmad Tarmizi Wan Idris, Trade Consul at the Trade Section, Consulate General of Malaysia in Chennai (MATRADE Chennai).
Trade between Malaysia and India dropped in 2023, recorded a total of USD 16.53 billion, a 15.8% decrease compared to the previous year. Malaysian exports to India decreased by 19.9% to USD 9.98 billion during the same period. Malaysia recorded a trade surplus of USD 3.43 billion.
Post Covid Alignment
Malaysia recorded strong growth in trade with India in the first 2 years after the Covid-19 pandemic. Thus, 2023 was a year that realign the growth of trade according to the trajectory that we have achieved before Covid-19 pandemic. Trade is expected to grow in 2024 in a modest way.
Manufactured Goods Lead the Way
The Manufactured Goods sector remained the primary driver of Malaysia’s exports to India, accounting for a staggering 67.4% of the total value in 2023. Nevertheless, this sector also experienced slight decline, falling by 5% compared to 2022.
Despite the overall decrease in exports, some sub-sectors within the Manufactured Goods sector performed well:
- Manufactures of Metal: up 22.5%
- Machinery, Equipment & Parts: up 33%
- Electrical & Electronic Products: up 13%
- Processed Food: up 11.6%
The biggest drop of Malaysian exports in 2023 contributed by the decline of The Agriculture Goods sector by 31.2% compared to 2022.
Reasons/factors for the Export Decline
- Increase in domestic productions
- Currency fluctuations
- Global trade disruptions
- Future Outlook
- Despite the current dip in exports, the future outlook for Malaysia-India trade remains positive. Several factors support this optimism:
- Growing middle class, urbanization and consumer spending in India
- Strengthening bilateral trade relations through the Malaysia India Free Trade Agreement
- Diversification of exports towards higher value-added goods and services
- Focus on new sectors like semiconductors, electric vehicles and electrical & electronic products
While the decline in Malaysian exports presents a challenge, the positive future outlook indicates promising opportunities for growth in the coming years. Malaysian Trade Office in Chennai will continue to carry out trade promotional activities to expose more Malaysian companies and Malaysian capabilities in India.
