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Two Sides of the Strait: Inside India's Sabang Port and BrahMos Deal With Indonesia

Writer: Thoughts Initiative Team
Thoughts Initiative Team
Jul 7
3 min read

Prime Minister Narendra Modi's two-day state visit to Jakarta — his first to Indonesia since 2023 — closed with a cluster of agreements that read less like a routine bilateral wrap-up and more like a strategic recalibration. The headline: India and Indonesia will jointly develop the Sabang port on Weh Island, off the northern tip of Sumatra, giving New Delhi a presence on both flanks of the Strait of Malacca.


$630 Mn

3rd

$9–9.7 Bn

~$28–30 Bn

BrahMos-Astra missile package value

Country to buy BrahMos (after Vietnam, Philippines)

Great Nicobar project cost (India's other flank)

Bilateral trade, 2024-25


The Sabang Calculus


Sabang has been declared a free port three times since 1896 — under Dutch administration, and again by Indonesian governments in 1963 and 2000 — and has never quite attracted the volumes its location promises. India's interest in the port dates back to 2014-15. Paired with India's own Great Nicobar project — the Galathea Bay International Container Transshipment Terminal, a dual-use airport and township complex cleared by the National Green Tribunal in February 2026, with its first phase due by 2028 — Sabang gives New Delhi a rare pincer position on what Chinese strategists have long called the "Malacca dilemma": Beijing's structural dependence on a single, chokepoint-vulnerable sea lane for its energy imports.


The Defence Package


The trip's other headline item was a defence agreement built around the BrahMos supersonic cruise missile — the India-Russia joint venture system already sold to Vietnam and the Philippines, and now, at an estimated $630 million, to Indonesia, building on the ₹3,800 crore ($440 million) BrahMos contract Jakarta signed back in February 2025. Alongside it, Indonesia will acquire India's Astra beyond-visual-range air-to-air missile, compatible with the Russian-made Sukhoi jets already in the Indonesian Air Force. A parallel agreement between Indonesia's Republikorp and India's Bharat Dynamics covers further air-to-air missile cooperation.


Interest in BrahMos has climbed sharply since India used the system in combat for the first time during its four-day conflict with Pakistan last year — and New Delhi says it has fielded interest from more than half a dozen other countries, including the UAE.


Beyond Defence: Minerals, Steel, Elections


The visit also produced MoUs on critical minerals — nickel and rare-earth magnets, both central to Indonesia's resource base and India's clean-energy and electronics supply chains — a Steel Authority of India-Krakatau Steel joint venture for stainless steel slab manufacturing, and cooperation on Indonesia-specific electronic voting machines.


Why This Matters


Bilateral trade, currently running close to $28–30 billion a year — already ahead of India's trade with the UK — is targeted to reach $100 billion by 2030, even as India's roughly $20 billion trade deficit with Indonesia remains a live friction point. President Prabowo Subianto said the two countries had agreed to "accelerate negotiations on a preferential trade agreement," alongside the deepening defence and connectivity ties. The visit sits inside Modi's wider Indo-Pacific swing — Indonesia, then Australia and New Zealand — under India's Act East policy, the same maritime-infrastructure push that recently saw India's biggest warship builder acquire Sri Lanka's largest shipyard — at a moment when Beijing's naval reach into the Indian Ocean is expanding in parallel. The monitorable to track: how quickly the Sabang port pact moves from MoU to construction, and whether the preferential trade agreement talks produce a firm timeline.


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