The strategic and defence partnership between India and Indonesia has received impetus from two different sources of commitment – commitment emanating from the improved bilateral  relationship and India’s commitment to its growing strategic engagement with the ASEAN. Apart from bilateral defence cooperation, the two countries have engaged bilaterally in addressing non-traditional security challenges facing the region such as terrorism, maritime piracy and so on. India and Indonesia signed a Bilateral Agreement on Cooperative Activities in the Field of Defence in 2001. India has been supplying defence equipment, especially for the Indonesian navy and the two countries are exploring other areas for defence cooperation.

Indonesia has shown its keen interest in importing items such as batteries for torpedoes, engines for Parchim-class corvettes, repair facilities for Type 209 submarines and so on. India had proposed a draft Memorandum of Understanding on Defence Cooperation in 1995 with the focus on supplies, technologies, joint production and joint projects. Although the MoU has been signed by both the countries, it is yet to be ratified by the Indonesian Parliament. During the visit of the Indonesian President, Mr. Susilo Bambang Yudhoyono in November 2005, the two countries agreed to hold an annual "strategic dialogue" at the level of senior officials, with the first meeting to be held in the first half of 2006.

An MoU on cooperation between the countries’ diplomatic training institutes has been signed. India has been providing training to Indonesian military officers under the ITEC-I program. India and Indonesia signed a Memorandum of Understanding on Combating International Terrorism in July 2004, which provided for the formation of a Joint Working Group (JWG) on CounterTerrorism. The JWG held its first meeting in New Delhi in February 2005 and agreed to strengthen bilateral cooperation in combating terrorism and other transnational crimes and in maritime security through exchange of information and intelligence, capacity building and legal cooperation. During the Regional Meeting of the Ad Hoc Group of Law Enforcement Practitioners, held in Bali in August 2004, India stressed devising institutional mechanisms for sharing of information relevant to each country and speedy extradition of persons involved in terrorist activities An important area of bilateral cooperation is the issue of maritime terrorism and piracy in and around the Malacca Strait.

The key components of cooperation have been visits of Indian navies to Indonesian ports and vice-versa, conducting joint naval exercises, escorts of Indonesian ships in the Andaman Sea and so on. Since 1995, Indonesia, along with Singapore, Thailand and Malaysia has been taking part in the biennial gathering of ships known as MILAN hosted by India. India has also been conducting bilateral Search and Rescue Operations with Indonesia named Indopura SAREX. Since 1997, bilateral SAREX has been converted into a multilateral maritime operation comprising of India, Indonesia, Malaysia and Singapore. Indian naval ships have been paying goodwill visits to Indonesian ports. India has also proposed joint patrol in and around the Malacca Strait, but Indonesia has shown its reluctance in allowing extra-regional navies in the Strait. In the aftermath of Tsunami, India launched the Operation Ghambir in January 2005 and sent food and medical supplies to Indonesia through its hospital ship INS Nirupak and a corvette INS Khukri. President Yudhoyono during his visit to India in November 2005 and the  Indonesian Vice President Dr. Jusuf Kalla, during his visit in January 2007, expressed their country’s gratitude for India’s assistance in Tsunami relief operations.