Malaysia's top ethnic Indian party, which was shunned in elections a year ago, faces a major challenge after a rival party was launched with the blessing of the ruling coalition.
Prime Minister Najib Razak presided over the debut of the Malaysian Makkal Sakti (MSP) party, which sprang from the banned rights group Hindraf, whose leaders were jailed for mounting anti-discrimination protests in 2007.
Analysts said the premier's role was a slap in the face for the Malaysian Indian Congress (MIC), a member of the 13-member Barisan Nasional (BN) coalition that has ruled Malaysia since independence in 1957.
They said that Najib, who needs to reclaim support from minority Indians and Chinese who are shifting towards a resurgent opposition, cannot rely on the MIC, which is widely seen as out of touch and beset by cronyism.
"That the PM himself is backing a small, insignificant Indian party shows he has lost faith in the MIC, and the MSP is now a threat to the MIC, which will definitely try to block it from joining the ruling coalition," said political analyst Khoo Kay Peng.
"The amount of attention being given to MSP is surprising given that it has yet to prove whether it can attract Indian votes," he said.
In a speech punctuated by standing ovations and the premier leading cheers of "Makkal Sakti" (People's Power), Najib said he would work with anyone who supported his government.
"I'd like to reach out to anyone in and outside of BN as long as they believe in my government, we can work together," he told some 3,000 party members and supporters at the lavish ceremony Saturday.
"These people want to support the BN, my leadership and government except that they are not ready to be in MIC so they have formed their own party. It is not my instigation for them to form the party," he said.
MSP president R. Thanenthiran said his party did not have any immediate plans to join the coalition.
"We are trying to improve the living conditions of the Indian community first and we can think of joining the BN later," he told AFP.
The MIC, which has been led by veteran politician Samy Vellu since 1979, has been criticised for failing to improve the lives of ethnic Indians who say they are disadvantaged in terms of education, wealth and job opportunities.
The party was punished in national elections a year ago, securing only three out of nine parliamentary seats contested, but has ignored calls for change and retained Samy as its leader in internal polls last month.
The shunning of the MIC was part of an unprecedented drubbing for the BN, which lost its two-thirds parliamentary majority and control of five states to the Pakatan Rakyat opposition alliance.
Ethnic Indians make up less than eight percent of the 27 million population of Malaysia, which is dominated by Muslim Malays.
Influential blogger and former New Straits Times chief editor Kadir Jasin said the MIC only had itself to blame for the current state of affairs.
"The blame has to be on MIC itself because it has not been seen to be effectively representing the interests and welfare of the Indian community," he told AFP.
"It raises questions as to what the MIC's future role will be in the ruling coalition."
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