Media365
Prime Minister Narendra Modi’s visit to Indonesia this week is expected to go beyond efforts to revive bilateral trade, with both countries likely to focus on building a broader strategic economic partnership spanning investment, critical minerals, manufacturing, digital connectivity and maritime cooperation.
The visit comes at a time when bilateral merchandise trade has softened. According to a Rubix Data Sciences trade outlook report, goods trade between India and Indonesia declined from USD 38.8 billion in FY2023 to USD 24.8 billion in FY2026, reflecting weaker export and import demand. However, analysts believe the slowdown is unlikely to overshadow the long-term strategic importance of the relationship.
From trade to economic resilience
Rather than concentrating solely on improving trade volumes, the discussions are expected to centre on creating resilient supply chains and expanding cooperation in sectors that are increasingly critical to both economies.
Indonesia is among the world’s leading producers of nickel, a key raw material used in electric vehicle (EV) batteries, making it an important partner for India’s clean energy and mobility ambitions. Alongside critical minerals, both countries are expected to explore collaboration in renewable energy, manufacturing, logistics and industrial value chains.
For India, diversifying supply chains has become a strategic priority as companies look to reduce dependence on concentrated sourcing hubs and build more resilient production networks.
Investment likely to take centre stage
Trade is expected to be only one part of the economic agenda. Greater emphasis is likely to be placed on attracting investments, improving market access and encouraging business partnerships across infrastructure, digital economy, healthcare, food processing and advanced manufacturing.
Indian companies are increasingly looking at Southeast Asia as a growth market, while Indonesia offers opportunities in natural resources, industrial development and downstream processing of critical minerals.
A stronger ASEAN partnership
The visit also reinforces India’s broader engagement with ASEAN under its Act East Policy. Indonesia, the largest economy in Southeast Asia and India’s second-largest trading partner within ASEAN, is viewed as a critical partner in strengthening regional economic integration and Indo-Pacific supply chains.
Last month’s 8th India-Indonesia Joint Commission Meeting had already identified trade, defence, maritime security, digital connectivity, healthcare and critical minerals as priority areas for deeper cooperation. Prime Minister Modi’s visit is expected to build on that momentum by advancing sector-specific partnerships and encouraging greater private-sector participation.
Diversifying bilateral trade
While overall trade has declined, the composition of commerce between the two countries is gradually evolving.
India’s exports are becoming more diversified, with shipments of auto components, agricultural products, frozen bovine meat and unmanufactured tobacco gaining share even as refined petroleum exports have declined. On the other hand, Indonesia continues to be India’s largest supplier of palm oil and a major source of coal, while emerging as a strategic partner in critical minerals.
The road ahead
Experts believe the success of the visit will be measured less by immediate gains in bilateral trade and more by its ability to lay the groundwork for long-term economic cooperation.
With both countries seeking to strengthen supply-chain resilience, accelerate the energy transition and expand investment flows, the India-Indonesia partnership is increasingly evolving from a traditional buyer-seller relationship into a strategic economic alliance.
