The pact on recruitment of Indian workers assumes significance as illegal immigration and human trafficking from India to Malaysia are among major concerns of the two governments.
India and Malaysia on Tuesday elevated their ties to a comprehensive strategic partnership after Prime Minister Narendra Modi and his Malaysian counterpart Anwar Ibrahim held extensive talks focusing on expanding cooperation in several sectors, including trade, investment and defence.
A pact on promoting recruitment of Indian workers in Malaysia and protection of their interests was one of the at least eight agreements inked between the two sides.
The pact on recruitment of Indian workers assumes significance as illegal immigration and human trafficking from India to Malaysia are among major concerns of the two governments.
Ibrahim began his three-day visit to India on Monday night in his first trip to the country as the prime minister.
"Today, we have decided that our partnership will be elevated to a Comprehensive Strategic Partnership," Modi said in his media statement.
The prime minister said the agreement on employment of workers will promote the recruitment of Indians as well as the protection of their interests.
Highlighting the importance of India-Malaysia economic engagement, Modi said bilateral trade is being done in Rupees and Malaysian currency Ringgit.
"We believe that there is still a lot of potential in economic cooperation. Bilateral trade and investment should be expanded," he said.
"We should increase mutual cooperation in new technological areas, such as semiconductor, Fintech, defence industry, artificial intelligence and quantum. We have emphasised on accelerating the review of the Comprehensive Economic Cooperation Agreement between India and Malaysia," he said.
The prime minister said work will also be done to connect India's digital payment system UPI with Malaysia's PayNet.
"We are also unanimous in the fight against terrorism and extremism," he said.
Modi also described Malaysia as an "important partner" of India in the ASEAN (Association of Southeast Asian Nations) and Indo-Pacific region.
"India gives priority to ASEAN centrality. We agree that the review of the FTA (free trade agreement) between India and ASEAN should be completed in a timely manner," he said.
In an apparent reference to the situation in South China Sea that has been witnessing growing Chinese military muscle-flexing, Modi said, "We are committed to freedom of navigation and over flight in accordance with international laws. And, we support the peaceful resolution of all disputes."
The two sides also deliberated upon new possibilities of cooperation in the defence sector as well.
Both sides also decided to establish a digital council for cooperation in digital technology, and to form a start-up alliance.
In his remarks, Ibrahim said all issues, sensitive or likewise, were discussed in reflection of the true meaning of friendship between the two countries.
"India is a great nation with a great history and a great culture and civilisation. It is in many ways multi-cultural and multi-religious," he said.
"Therefore, we have a lot of commonalities which extend beyond trade and investment," he added.
In the Modi-Ibrahim talks, it was decided to set up an Ayurveda chair in Malaysia's University Tunku Abdul Rahman.
Apart from this, a decision has also been taken to establish a Tiruvalluvar Chair in the University of Malaya.