India and Indonesia share a long history of cultural, economic, and political ties. This enduring relationship has been shaped by shared traditions, historical trade routes, and mutual political aspirations. The two countries have evolved together as natural allies in the Southeast Asian and global geopolitical landscape.

Hinduism and Buddhism, originating in India, spread to Indonesia by the first century, with Java becoming a center of Buddhist influence. Indian epics like the Ramayana and Mahabharata continue to influence Indonesian art and dance. Festivals like Bali Yatra celebrate the maritime links between the two nations. Both countries endured European colonialism, with India under British rule and Indonesia under the Dutch. Post-independence, India and Indonesia aligned politically, prioritizing sovereignty, economic self-sufficiency, and an independent foreign policy, strengthening their diplomatic relations.

Growing trade and investments between India and Indonesia

In the modern era, the relationship between India and Indonesia has significantly strengthened in the areas of trade and investment. Indonesia has become India’s second-largest trade partner in the ASEAN region, after Singapore. In the fiscal year 2023-24, bilateral trade between the two nations reached USD 29.4 billion, with India exporting goods worth USD 6 billion and importing products worth USD 23.4 billion.

India and ASEAN Trade trajectory (2023-24) (Value in USD Billion)

India’s exports to Indonesia primarily include refined petroleum products, commercial vehicles, telecommunication equipment, agricultural commodities, bovine meat, steel products, and plastics. On the other hand, India imports coal, crude palm oil, minerals, rubber, pulp, paper, and hydrocarbons from Indonesia. Indonesia’s rich natural resources, especially coal and palm oil, make it a critical supplier for India’s growing energy and industrial sectors.

In terms of future trade potential, there is significant room for growth in sectors such as pharmaceuticals, automotive components, automobiles, engineering products, information technology (IT), biotechnology, and healthcare. India, with its advanced pharmaceutical and IT sectors, is poised to expand its export offerings to Indonesia, while Indonesia’s increasing demand for Indian expertise and products in these sectors presents opportunities for mutual benefit.

India’s significant role in Indonesia’s growth

Indian investments in Indonesia span various sectors, including infrastructure, power, textiles, steel, automotive, mining, banking, and consumer goods. Notable Indian conglomerates such as Tata Power, Reliance, Adani, L&T, GMR, and Mahindra have established a strong presence in Indonesia, through wholly owned subsidiaries or joint ventures. Indian companies like Tata Motors, Bajaj, Royal Enfield, and TVS are particularly prominent in Indonesia's automotive sector, while companies such as Wipro, TCS, and Tech Mahindra are growing their footprint in the information technology and services sector.

As per the latest figures, Indian investment in Indonesia from 2000 to 2022 amounted to USD 1.219 billion, with a notable increase in 2022, where Indian companies invested around USD 127.54 million in 1,166 projects.

India's growing investment presence in Indonesia reflects both countries’ mutual desire to deepen economic cooperation. Indian businesses are attracted by Indonesia’s strategic location, its large consumer market, and its rich natural resources. In turn, Indonesia benefits from Indian expertise in sectors such as IT, infrastructure, and manufacturing, which are crucial to its long-term economic development.

Strategic partnerships and diplomatic engagements

India and Indonesia have developed a comprehensive strategic partnership over the years, underpinned by shared interests in regional and global stability. In recent years, high-level interactions between the two countries have intensified. A key moment in this relationship occurred when Indian Prime Minister Narendra Modi met with the newly elected President of Indonesia, Prabowo Subianto, during the 2023 G20 Summit in Brazil. The two leaders reaffirmed their commitment to strengthening bilateral ties, particularly in areas such as trade and investment, defense and security, connectivity, tourism, health, and people-to-people exchanges.

Both India and Indonesia celebrated 75 years of diplomatic relations in 2023, and efforts have been made to commemorate this milestone in a manner befitting the significance of their partnership. A series of collaborative events have been held in both countries, underscoring the enduring friendship between the two nations.

India’s active participation in multilateral forums has further strengthened this bilateral partnership. At the 20th ASEAN-India Summit in Jakarta, Indonesia, in 2023, Prime Minister Modi emphasized the centrality of ASEAN in the Indo-Pacific region and outlined India’s 12-point proposal for enhancing cooperation with ASEAN. This proposal focused on areas such as connectivity, digital transformation, trade and economic engagement, and addressing contemporary challenges such as terrorism, climate change, and disaster resilience. India’s commitment to regional peace and stability was also emphasized during the 18th East Asia Summit held in Jakarta, where India’s dedication to a free, open, and rules-based Indo-Pacific order was reiterated.

People-to-People ties strengthen cultural and educational exchanges

People-to-people ties between India and Indonesia have long been a hallmark of their bilateral relationship. Cultural diplomacy, educational exchanges, and tourism have played an essential role in bridging the gap between the two countries. Students from both nations have participated in educational programs and scholarships, while cultural delegations and performances have fostered mutual understanding and respect.

In addition, tourism has become an increasingly important aspect of the India-Indonesia relationship, with both nations seeking to attract tourists from each other’s populations. Bali, one of Indonesia’s most popular tourist destinations, sees a considerable number of Indian tourists annually, while Indian states like Kerala and Goa attract many Indonesians. This flow of people has contributed to the strengthening of ties at the grassroots level.

In conclusions, India and Indonesia’s bilateral relationship is a reflection of two ancient civilizations coming together to forge a partnership for the future. With its rich history of cultural exchanges and shared geopolitical interests, the relationship between India and Indonesia is well-positioned to continue growing in the 21st century. Economic cooperation, investment, defense, and multilateral engagement will serve as key pillars of this partnership as both nations work to meet the challenges and opportunities of a rapidly changing world.

With a commitment to enhancing regional security, promoting sustainable economic growth, and expanding people-to-people exchanges, India and Indonesia stand as important partners in the Indo-Pacific region. As the two nations continue to build upon their shared heritage and common interests, their bilateral relationship will play a pivotal role in shaping the future of the Asian region.