Malaysia is a popular destination for Indian tourists and the move comes in the wake of its 'Visit Malaysia Year 2014.
Home Minister Ahmad Zahid said Indian and Chinese tourists will be granted the visa on arrival (VoA) facility, but only for those who enter Malaysia through a third country.
Currently, India and China passport holders are required to apply for a visa for travel to Malaysia.
"But we will not compromise if there are those who come to cause social problems or do not return (to their home country)," Zahid said today.
Authorities said that many visitors overstayed after the expiry of their visas.
An Immigration official said there were 39,000 Indian nationals and 6,000 Chinese citizens who have overstayed in Malaysia, Star newspaper said.