Following a historic 2025 defined by President Prabowo’s state visit and resilient Q3 growth,
the stage is set for a high-value partnership in the coming year.
As we close the books on 2025, the view from Jakarta is markedly different than it was just
twelve months ago. If 2024 was a year of transition, 2025 has been the year of definition. The sight of President Prabowo Subianto as the Chief Guest at India’s 76th Republic Day parade in January 2025 was not merely ceremonial; it was a geopolitical declaration. It signaled that the “Golden Era” of India-Indonesia relations is no longer a distant forecast—it is the operational reality we are navigating today.
With Indonesia’s economy posting a resilient 5.04% GDP growth in Q3 2025 (BPS) and India continuing its trajectory as the fastest-growing major economy, the peluang (opportunity) for cross-border businesses has shifted from simple commodity trading to deep strategic integration.
Bilateral Momentum: The 2025 Pivot
The diplomatic calendar of 2025 has been relentless. Following the Republic Day milestone,
the momentum culminated in the 3rd India-Indonesia Defence Ministers’ Dialogue held in New Delhi this past November. The discussions around the Joint Defence Industry Cooperation Committee and the advanced negotiations on the BrahMos missile systems signify a maturing partnership that goes far beyond coal and palm oil.
While bilateral trade has consolidated around the USD 29.4 billion mark (FY2023-24
baseline), the composition is changing.We are seeing a distinct rise in high-value engineering exports and pharmaceutical collaborations, moving us toward the ambitious—but achievable—USD 50 billion target. The continuity of the “Act East” policy under the new
Indonesian administration has provided the stability businesses crave.
The 2026 Business Opportunities Matrix
Looking ahead to 2026, the “low-hanging fruit” has been picked. The next wave of value
creation lies in specialized sectors:
1. Defence & Strategic Manufacturing
The defence corridor is the breakout sector of 2026. With Indonesia opening its infrastructure and defence manufacturing to Indian investment (a key outcome of the Jan 2025 visit), Indian OEMs have a rare window to establish maintenance, repair, and overhaul (MRO) hubs in the archipelago.
2. Renewable Energy & Green Finance
The World Bank’s approval of a USD 2.1 billion package in June 2025 to boost Indonesia’sclean energy access is a game-changer.3 For Indian solar EPC firms and renewable consultants, this unlocks funded projects in Sumatra and Kalimantan that were previously non bankable.
3. Digital Public Infrastructure (DPI)
The conversations initiated by Bank Indonesia (BI) in late 2025 to connect QRIS with India’s UPI are nearing operational reality. Once live, this will democratize cross-border payments for MSMEs, reducing reliance on the US Dollar and smoothing the path for fintech kerja sama (collaboration).
4. Healthcare & Pharma
The “India Stack” in health—affordable generics and telemedicine—is finding renewed
relevance as Indonesia seeks to optimize its JKN (national health insurance) spending. The
regulatory easing for foreign doctors and standardized drugs, discussed throughout 2025, is expected to yield specific policy shifts in early 2026.
Regulatory Landscape: The “Kemudahan” Continues
The regulatory environment in late 2025 reflects a government eager for FDI.
• Golden Visa Traction: The uptake of the Golden Visa since its full rollout has been
robust. For Indian investors, the 5-year residency option (via a USD 350,000
investment in bonds or shares) has simplified the “fly-in, fly-out” executive lifestyle,
offering a level of stability previously unavailable.
• Tax Incentives: The Ministry of Investment (BKPM) has maintained the tax holiday
thresholds, but enforcement on “local content” (TKDN) is stricter. The India-Indonesia
DTAA remains your best shield against double taxation on technical service fees, a
provision that becomes even more critical as we export more services than goods.
2026 Economic Outlook: Resilience Amidst Volatility
As a CPA, I analyze the numbers, not the hype. The fundamentals for 2026 are solid but require vigilance.
• GDP & Growth: With Indonesia’s cumulative growth for Jan-Sept 2025 standing at
5.01%, the country has proven it can weather global headwinds better than many
peers.4 The IMF and Big 4 outlooks project this stability to continue, forecasting a 5.1%
baseline for 2026.
• Currency & Inflation: The Rupiah has shown resilience in H2 2025. However, with
global interest rates in flux, the Local Currency Settlement (LCS) framework remains
an underutilized hedging tool. Indian CFOs in Jakarta must prioritize INR-IDR invoicing
to mitigate the lingering USD volatility.
What the Experts Are Saying
The “smart money” consensus for 2026 is cautious optimism:
• Deloitte’s 2025-26 Outlook highlights a rebound in Southeast Asian IPO markets,
driven by financial services—a signal for Indian fintech unicorns to look at Jakarta for
secondary listings.
• Standard & Poor’s notes that while external demand may soften, Indonesia’s
domestic consumption (growing at nearly 5% in Q3 2025) provides a safety net that
few other emerging markets possess.
• KPMG advises that 2026 will be the year of “strategic intelligence,” urging firms to
prepare for supply chain realignments that favour non-aligned corridors like India
Indonesia.
Conclusion: The “Selamat Datang” to a New Era
The groundwork laid in 2025—from the Presidential palace in New Delhi to the solar parks of Kalimantan—has paved a runway for 2026. The Indonesian government has rolled out the Selamat Datang (welcome) mat; it is now up to Indian enterprise to walk through the door.
We are no longer just neighbors; we are strategic partners in the Asian Century. For those
ready to navigate the nuances of this corridor, the upside is immense. Sampai jumpa in 2026—let’s make it a year of record-breaking partnership.
About the Author
CA Loganathan Anandan, B.Com, FCA, CISA, CDPSE, CFE, FIPA (Aust.) is the President Director of PT JCSS Management Consulting. With two decades of experience in Indonesia, he advises multinational boards and Indian executives on risk, compliance, and strategic growth in the Indo-Indian corridor.
la@jcssglobal.com https://www.linkedin.com/in/caloganathan/
