By Shoeb Kagda, Co-Founder Indonesia Economic Forum
A bromance is emerging between two of Asia’s most consequential political leaders. Following Indonesian President Prabowo Subianto first state visit to India as President from in January 2025 at the invitation of Indian Prime Minister Narendra Modi, the two leaders have struck up a unique friendship.
That friendship will be further deepened when Prime Minister Modi visits Indonesia from July 6 to July 8 at the invitation of President Prabowo. It will be his first official visit to Indonesia since President assumed office and his fourth visit to Indonesia overall.
The visit carries significance well beyond the signing of individual agreements. It reflects the growing strategic importance of the India–Indonesia relationship amid shifting geopolitical and economic dynamics in the Indo-Pacific region.
During Prabowo’s January 2025 visit to India, both leaders agreed on several important elements including:
- deepen defence cooperation;
- expand trade and investment;
- strengthen maritime security;
- increase collaboration in digital technology and artificial intelligence; and
- enhance healthcare and education partnerships.
The Jakarta summit is expected to move these commitments from political declarations toward concrete implementation.
From Look East to Act East
Prime Minister Modi’s visit also reflects India’s growing engagement with Southeast Asia. Over the past decade, India’s engagement with Southeast Asia has shifted from being primarily diplomatic to becoming increasingly strategic, economic, and geopolitical. What was once framed under the “Look East Policy” has evolved into a far more ambitious “Act East Policy,” reflecting India’s desire not merely to engage Southeast Asia, but to become an integral part of the region’s economic architecture.
For Southeast Asia, India represents one of the world’s fastest-growing major economies and a market of over 1.4 billion people. For India, Southeast Asia serves as the gateway to the Indo-Pacific, an increasingly important manufacturing hub, and a strategic counterbalance in an era of heightened geopolitical competition.
Trade between India and Southeast Asia has nearly doubled over the past decade from US$76 billion in 2014 to US$140 billion in 2024. ASEAN is now among Indian’s largest trading partners, accounting for roughly 11 percent of India’s global trade. As the largest economy in ASEAN, Indonesia is the anchor of this rising economic relationship.
While the past decade has seen tremendous growth in trade and economic ties between the two sides, the next decade could be even more important. As global supply chains shift and fracture, businesses are re-evaluating their strategies and assessing their options as several structural forces are likely to accelerate change. In such a dynamic environment, India and Indonesia can be the lead change agents as the two leaders map out a new path forward.
As global manufacturers reduce over dependence on any single production base, India and Southeast Asia are increasingly viewed as complementary manufacturing ecosystems rather than competitors in sectors such as electronics, automotive, pharmaceuticals, semiconductors and chemicals.
With more companies adopting the “China +1” or “China + many” strategy, new distribution channels are being created in the region. While China remains the dominant economic force in Asia, Indian and Southeast Asian companies can find new pathways to collaborate.
India, for example has its Make in India and National Logistics policies while in Southeast Asia, Vietnam dominates electronic exports; Indonesia is developing an electric vehicle industry; Thailand remains a regional automotive hub and Malaysia plays a critical role in semiconductor packaging and testing.
Together these economies can form integrated regional value chains with Singapore providing global connectivity and world class financial services.
Human capital can unlock potential
When the two leaders meet in Jakarta, their discussions should not sway far from the most significant technology development sweeping the planet. As Artificial Intelligence gathers pace and impacts all aspects of human society. AI will fundamentally alter how we work, play and live in the future.
The key to maximising AI impact is to develop human capital, arguably one of the most promising and underexplored areas for India-Indonesia cooperation. India and Indonesia both have relatively young, productive populations that need good paying jobs and promising careers. While discussions between the two governments often focus on trade, defence and digital technology, human capital development may ultimately have the greatest long-term economic impact.
Indonesia has a large and productive labour pool but a relatively small talent pool especially in top management. India’s greatest strength is not simply its population but the depth of its knowledge economy.
However, very few Indian universities make the effort to engage with Indonesian universities to collaborate in areas such as student exchange, faculty exchange and joint research projects. A number of Indonesia universities such as Universitas Indonesia, Gadjah Mada University, Bandung Institute of Technology and Bogor Agricultural University have engaged with Indian universities have signed MoUs with the Indian Institutes of Technology, Indian Institutes of Management, University of Delhi and Jawaharlal Nehru University
However, there are few large-scale, strategically significant partnerships comparable to those that Indonesia has with universities in Australia, Japan, China, Singapore, or the United States.
The greatest potential lies not in traditional student exchanges but in more strategic collaboration in areas such as executive education; joint AI and digital skills academies; research centres and industry-linked programs. Such programs could create triangular partnerships between Indonesian, Indian and Singapore universities to deliver programs across Southeast Asia,
Viewed through the lens of economic development rather than education alone, university collaboration could become a key pillar of the India–Indonesia relationship. India has the capacity to train large numbers of engineers, managers and technology specialists, while Indonesia has a pressing need to develop exactly these capabilities. Well-designed institutional partnerships could therefore help close Indonesia’s talent gap while strengthening India’s educational influence in Southeast Asia—creating benefits that extend well beyond the university sector.
Such a partnership would strengthen not only economic ties but also people-to-people connections and institutional relationships. As India seeks a larger role in Southeast Asia through its Act East policy and Indonesia pursues higher-value industries under President Prabowo’s economic agenda, investment in human capital could become the cornerstone of the next phase of bilateral cooperation. For organizations involved in executive education, this represents a particularly significant opportunity: leadership development is likely to become just as important to the India–Indonesia relationship as trade, investment and defence.
About the Author
Shoeb Kagda is Country Director for the Singapore Management University Indonesia Office and Co-Founder of the Indonesia Economic Forum