NEW DELHI, Aug 20 (Reuters) - Prime ministers of India

and Malaysia sought to reset relations between the two countries

on Tuesday as they agreed to boost trade, movement of workers

and the use of their own currencies to settle bilateral

transactions.

Malaysia is home to nearly 3 million people of Indian

heritage, but relations soured around late 2019 following

remarks by largely Muslim Malaysia's then-Prime Minister

Mahathir Mohamad against New Delhi removing the autonomy of

India's only Muslim-majority region Kashmir.

That had also hit purchases of Malaysian palm oil by India,

the world's biggest buyer of edible oils like palm.

But the Malaysian approach has changed under Prime Minister

Anwar Ibrahim, who took office in 2022 and previously told

Reuters he was keen to have good ties with India.

The two countries started settling trade in their own rupee

and ringgit currencies in April last year, and India's palm oil

imports from Malaysia has also increased.

"With the support of Prime Minister Anwar Ibrahim, there has

been a new momentum and energy in our partnership," Modi said,

as Anwar stood by his side during his first visit to New Delhi

as prime minister.

"Today we have decided that our partnership will be elevated

to a 'Comprehensive Strategic Partnership'. We believe that

there is still a lot of potential in economic cooperation.

Bilateral trade and investment should be expanded."

Modi noted that Malaysia had invested $5 billion in India in

the past year and identified semiconductors, financial

technology, the defence industry and artificial intelligence as

areas of possible cooperation.

Anwar said his country would reinvigorate relations with

India in all fields and that their potential had not been tapped

in the past few years.

Indian foreign ministry official Jaideep Mazumdar told a

press conference the country would make a one-off export of

200,000 metric tons of non-basmati rice to Malaysia, making an

exception to a ban on such shipments.

Mazumdar said India is also keen to sell defence equipment

to Malaysia, as well as aircraft manufactured by state-run

Hindustan Aeronautics Ltd.

The two countries also agreed a framework for the welfare of

Indian workers going to Malaysia, which sources labour from some

15 countries including India for its palm plantations and other

industries.

There are already some 140,000 Indian workers in Malaysia,

the highest ever, and this total could rise as India seeks job

opportunities for people at home and abroad.