India and Malaysia talk trade

Trade and investment will dominate the agenda

By South-east Asia correspondent Simon Ingram

Indian Prime Minister Atal Behari Vajpayee is visiting Malaysia - the first Indian leader to do so in six years - on a trip likely to be dominated by economic and business issues.

Among the agreements already signed is a deal allowing an Indian company to construct a new $1.5bn rail link in northern Malaysia.

But the more sensitive issue of India's attempt to build stronger ties to South East Asia is also on the agenda.

Atal Behari Vajpayee arrived at Malaysia's new administrative capital of Putrajaya outside Kuala Lumpur to a red-carpet welcome.

Prime Minister Mahathir Mohamed and a military guard of honour were on hand to welcome the Indian premier at the formal start of a visit he was forced to postpone in February, on account of the devastating earthquake in the state of Gujarat.

Business deals

Accompanied by his technology minister and a large business delegation, Mr Vajpayee's prime focus is economic.

Vajpayee is the first Indian leader to visit in six years

A series of bilateral agreements and memoranda have been signed - the most significant being the designation of an Indian company to construct a new railway line close to Malaysia's northern border with Thailand.

Said to be the largest overseas contract ever awarded to an Indian firm, Malaysia will pay for the project not in cash but in palm oil - 1.6 million tons in all, exported over five years.

Indian and Malaysian leaders are plainly keen to see their economic ties strengthened.

Bilateral trade is already brisk and both countries have ambitions to develop their high-tech infrastructure and industries.

Strategic ties

But for Delhi, closer ties with Malaysia have strategic diplomatic significance too.

India is pressing to join the South-east Asian regional grouping Asean and has enlisted Malaysia - a country with a substantial ethnic Indian minority - to support its so-far unsuccessful bid.

A more delicate matter likely to be raised on the sidelines of this visit is the ongoing legal case involving Italian businessman, Ottavio Quattrocchi, wanted by the Indian authorities in connection with the Bofors arms scandal.

Indian efforts to extradite him have so far been blocked by the Malaysian courts.