Recently, Maldives President Mohamed Muizzu visited India on a four-day state visit, referring to New Delhi as a valued partner. This shift in tone is noteworthy, given Muizzu’s earlier political stance that capitalized on anti-India sentiments, including derogatory remarks made by his ministers towards the Indian Prime Minister. The visit signals a transformation in the Maldives’ diplomatic relations with India.
Key Outcomes of the Visit
Several significant agreements were reached during the visit, aimed at strengthening the bilateral relationship between the two countries:
- Strengthening Bilateral Ties: India reaffirmed its commitment to supporting the Maldives under its Neighbourhood First policy and the SAGAR (Security and Growth for All in the Region) vision.
- Financial Assistance: India provided USD 100 million in Treasury bills to help the Maldives with its immediate financial needs, and also extended a USD 400 million and Rs 30 billion bilateral currency swap agreement to support the Maldives during its financial crisis.
- Comprehensive Economic and Maritime Security Partnership: Both nations agreed to establish a Comprehensive Economic and Maritime Security Partnership, focusing on people-centric and future-oriented development, serving as a stabilizing force in the Indian Ocean Region.
- Development Projects: The countries committed to completing the Greater Male Connectivity Project (GMCP) and conducting feasibility studies for connecting Thilafushi and Giraavaru islands, developing a port at Thilafushi, and maximizing the potential of airports like Hanimaadhoo and Gan.
- Trade and Economic Cooperation: Discussions on a bilateral free trade agreement, local currency trade settlement, and investment promotion were initiated. Enhancing tourism and economic diversification were also key focuses.
- Digital and Financial Cooperation: The launch of India’s Unified Payments Interface (UPI), Unique Digital Identity, and other digital services will enhance e-governance and service delivery. India introduced RuPay cards in the Maldives for smoother payments for Indian tourists.
Collaboration on Energy, Health, and Security
- Energy Cooperation: Both countries will collaborate on renewable energy projects and improving energy efficiency. India will help the Maldives participate in the One Sun One World One Grid global solar energy initiative.
- Health Cooperation: India will establish Jan Aushadhi Kendras in the Maldives to provide affordable generic medicines, and both nations will work together on mental health services, drug de-addiction, and emergency medical evacuation capacity-building efforts.
- Defence and Security Cooperation: The completion of the Maldives National Defence Force (MNDF) Ekatha harbour project at Uthuru Thila Falhu (UTF), funded by India, will strengthen the MNDF’s operational capabilities. Both countries emphasized the importance of food security through joint projects, such as an Agriculture Economic Zone and fish processing facilities.
People-to-People and Educational Cooperation
- Capacity Building: A Start-up Incubator-Accelerator will be set up in the Maldives to foster youth innovation and entrepreneurship.
- Consulate Establishments: Consulates will be opened in Bengaluru (India) and Addu City (Maldives) to promote stronger people-to-people links. Plans were also made to establish higher education institutions, skill centres, and an Indian Council for Cultural Relations Chair at the Maldives National University.
Strategic Importance of India for the Maldives
The softened stance by the Maldivian President can be attributed to the country’s current economic crisis, with foreign exchange reserves reduced to USD 440 million, just enough to cover 1.5 months of imports. Moody’s flagged the looming threat of a debt default, prompting a downgrading of the Maldives’ credit rating.
Additionally, the Maldives’ economic dependence on Indian tourism plays a critical role. Indian tourists form a major part of the Maldives’ tourism economy, and strained relations caused an estimated USD 150 million loss. India also supplies essential goods such as food, medicine, and construction materials, making it a critical trading partner.
Geopolitical and Security Considerations
India has long been a key player in the Maldives’ development and security landscape. The Maldivian President recognized India’s role as the First Responder, providing crucial assistance during crises like the water shortage in 2014 and the Covid-19 pandemic. India’s involvement in Operation Cactus in 1988, when it intervened to stop a coup, further underscores its strategic importance.
The softened stance of the Maldives reflects an effort to balance relations with both India and China, maintaining economic and security partnerships while diversifying foreign policy engagements.
Significance of the Maldives for India
For India, the Maldives’ strategic location along key International Shipping Lanes (ISLs) in the Indian Ocean is critical for global trade and energy supplies. Around 50% of India’s external trade and 80% of its energy imports pass through these lanes, making the Maldives a crucial partner in ensuring maritime security.
In addition, the Maldives’ vulnerability to climate change makes it an important ally in climate adaptation and mitigation strategies for India, further solidifying their collaboration on global challenges.