(Feb 20): A "bright spot of the world", an "unprecedented success story", a "raging bull", etc — this is how the world’s leading industry captains, economists and policy-makers defined India at the recently concluded World Economic Forum at Davos 2024. The enthusiasm about India’s economic capabilities was not without reason, but rather is backed by solid growth credentials.
In the last decade, India has moved from being the 11th largest economy to the fifth largest and is poised to be the third largest by 2027. India’s solar energy capacity has grown 26 times in the same period. Since 2014, India has attracted over US$596 billion of foreign direct investment (FDI), positioning itself as a preferred global investment destination.
Backed by robust digital infrastructure through the Jan Dhan-Aadhaar-Mobile (JAM) trinity — i.e. bank accounts (financial inclusion), Aadhaar (unique identity) and mobile phones (digital access) — India is breaking records year after year in digital transactions, surpassing 100 billion last year. Today, there is not a single field of activity and place in the world which is not positively impacted by the rising New India.
Malaysia, an Enhanced Strategic Partner for India and a key collaborator for development and prosperity of the Global South, is an important partner in India’s ongoing growth trajectory. Bilateral investment linkages between the two countries have been strong and growing across an array of sectors. However, to forge an investment partnership for the next decade, Malaysia and India should foster stronger collaborations in the key focus areas of Renewable Energy, Semiconductors and Electronics Manufacturing and Startups.
Towards this end, an India Investment and Trade Promotion Roadshow 2024 is taking place from February 20-21, 2024 in Kuala Lumpur with a 20-member high-powered delegation from India comprising senior officials and industry leaders led by Rajesh Kumar Singh, Vice Minister, Ministry of Commerce and Industry of India in town. The investment Roadshow is being organised by Invest India, India’s National Investment Promotion and Facilitation Agency in collaboration with the High Commission of India in Malaysia, Malaysia-India Business Council, Federation of Malaysian Manufacturers and Malaysian Semiconductor Industry Associations; and with the active engagement of the Ministry of Investment, Trade and Industry (Miti) of Malaysia, Malaysian Investment Development Authority (Mida), and Malaysian External Trade Development Corporation (Matrade).
Today, India ranks as the world's third largest energy consumer. India’s primary energy demand is expected to double by 2045. In anticipation of future requirements, India has adopted a sustainable approach by prioritising the development of environmentally sustainable renewable energy sources. India ranks fourth in global renewable energy installed capacity of over 180 GW. India has set itself the target of developing 500 GW of renewable energy capacity by 2030 and a net zero emission target by 2070.
India’s ongoing endeavour to ensure sustainable and affordable energy access to 1.4 billion people opens up vast opportunities for Malaysian companies particularly in ramping up India’s energy infrastructure and in key fields like solar rooftops, bio-fuels, green hydrogen, waste management (biogas sector), etc. Prime Minister Modi has recently launched a nationwide movement to embrace solar energy through his initiative to install solar rooftops in 10 million houses. India aims to achieve a 20% blending target by 2025 and to set up over 9,000 ethanol blending outlets across India. With the National Green Hydrogen Mission, India is striving to become a hub for hydrogen production and export.
Given this prospect, the renewable energy sector must figure prominently in the India-Malaysia investment mix. Malaysian companies are already realising the vast potential for investment collaboration in the green energy field with India. Since 2019, through Gentari, Petronas’ engagement in India’s RE sector has steadily grown, with Gentari’s acquisition of a 30% stake in India’s Greenko-owned firm AM Green Ammonia Holdings BV set to produce five million tonnes of green ammonia per annum by 2030; and Gentari’s joining India’s ReNew Energy Global to collaborate in a 50:50 joint venture for 5 GW of renewable energy capacity. Gentari has also partnered with India’s Tata Motors and Gati on electrical mobility. Such models of collaboration need to be replicated and more and more Malaysian-Indian ventures in green and renewable energy point the way forward.
Akin to the renewable energy sector, the electronics manufacturing and semiconductors sector is another key sector that holds vast potential for India-Malaysia collaboration. In the last nine years since 2014, India has achieved significant milestones in this sector. With electronics production crossing US$100 billion in 2023 (US$30 billion in 2014); the presence of over 200 mobile manufacturing units (from two units in 2014), and over 850 million broadband users (from 60 million in 2014), India has set itself an ambitious plan to achieve an output of US$300 billion in electronics manufacturing by 2025-26. India’s domestic market for semiconductors is expected to grow to U$110 billion by 2030. With dedicated industrial parks for electronics and semiconductor manufacturing, global players in the semiconductor sector are keen to set up shop in India. To encourage investments, India has launched key initiatives like the Production-linked Incentive Scheme (PLI) for Large-scale Electronics Manufacturing, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), etc.
Malaysia, with a strong E&E sector and contributing 15% to the global back-end semiconductor value chain, can emerge as a strong partner for India on technological collaboration, capacity building and skill development. Emphasis on the electronics and semiconductors sector in Malaysia’s New Industrial Master Plan (NIMP) fits well with India’s initiatives in this sector. A recent example of possible collaboration is the setting up of an India office at Bengaluru by Infinecs of Malaysia — a Penang-based company that offers electronics designing services.
The start-up sector is the third key sector that must be a core focus area for enacting the India-Malaysia partnership for next decade. Today, India is the third-largest start-up ecosystem in the world. From just 350 start-ups in 2014, India now boasts an armada of about 120,000 registered start-ups. India, which is home to one out of 10 unicorns globally, adds four start-ups every hour. While India and Malaysia have been collaborating in this field, it's time to ramp up this collaboration significantly. Steps in this direction are taking place with Start-up India, India’s leading start-up promotion agency, and Malaysia’s Cradle Fund now working together to set up the India-Malaysia Start-up Bridge. Malaysian companies and Khazanah are investing in India’s start-ups. For example, recently Wow! Momo, an Indian food chain company, secured an investment of US$42 million from Khazanah. Similarly, Indian start-up unicorns such as OYO Rooms, Pine Labs, Razorpay and Ninacart have also increasingly been expanding their market into Malaysia. In the India-ASEAN Start-up Summit held in December 2023, 35 Indian start-ups and accelerators across sectors such edutech, health tech, deep-tech and ESG participated and forged fruitful collaborations with Malaysian investors, corporates and other stakeholders. With the Malaysia Startup Ecosystem Roadmap (SUPER) 2021-2030 aimed at generating 5,000 start-ups by 2025, India and Malaysia can be natural partners for collaboration in the start-up sector.
Since the formation of the Unity Government in Malaysia led by Malaysia’s Prime Minister, Datuk Seri Anwar Ibrahim, both governments have worked intensively to strengthen the India-Malaysia Enhanced Strategic Partnership and create a further rich environment for greater investment and trade promotion. Since December 2022, over 13 bilateral ministerial and deputy ministerial visits have taken place, further cementing bilateral and economic ties. The 6th India-Malaysia Joint Commission Meeting co-chaired by the foreign ministers of both countries held in New Delhi in November 2023 has further resolved to undertake several new initiatives including the Malaysia India Digital Council, India-Malaysia Start-up Bridge, India Malaysia Annual Energy Dialogue, etc, to drive the relationship forward. Against this backdrop, the India Investment and Trade Promotion Roadshow from February 20-21, 2024 in Kuala Lumpur is apt and timely, and provides an important event for charting a roadmap on collaboration for the next decade in key areas such as renewable energy, semiconductors and electronics manufacturing.
B N Reddy is the High Commissioner of India to Malaysia