Maldives President’s India Visit: Strengthening Bilateral Relations and Addressing Economic Challenges

What’s in today’s article?

• Why in News?
• Significance of Maldives for India
• India – Maldives Bilateral Relation
• Visit of President of Maldives to India

Why in News?

President of Maldives, Mohamed Muizzu, arrived India on a State visit. This is the first bilateral visit of President Dr. Muizzu to India. He had earlier visited India in June 2024 to attend the swearing-in ceremony of the Prime Minister and the Council of Ministers.

Maldives is India's key maritime neighbor in the Indian Ocean Region (IOR) and holds a special place in Prime Minister's vision of ‘SAGAR’ (Security and Growth for All in the Region) and India’s ‘Neighbourhood First Policy’.

Significance of Maldives for India

• Strategic Importance
  • Maldives is barely 70 nautical miles away from Minicoy and 300 nautical miles away from India’s West coast.
  • It is situated at the hub of commercial sea‐lanes running through Indian Ocean (particularly the 8° N and 1 ½° N channels).
  • It has potential to allow a third nation’s naval presence in the area.
• Geo-political interest
  • Securing sea lanes of communication; Fighting piracy and sea-based terrorism; 
  • Making Indian Ocean a conflict free zone and restoring its status as sea of tranquil; 
  • Exploring blue economy and Enhancing trade; Security of Indian expatriates working there.
• China Angle
  • The Maldives has emerged as an important 'pearl' in China’s “String of Pearls” construct in South Asia.
• Internal security angle: Radicalisation
  • In the past, the number of Maldivians drawn towards terrorist groups like the Islamic State (IS) had increased.
  • Political instability and socio-economic uncertainty are further fuelling the rise of Islamist radicalism in the island nation.
  • This gives rise to the possibility of remote Maldivian islands being used as a launch pad for terror attacks against India and Indian interests.

India – Maldives Bilateral Relation

• Background
  • India was among the first to recognise Maldives after its independence in 1965 and to establish diplomatic relations with the country.
• India as a first responder and net security provider
  • In 1988, under Operation Cactus the Indian Armed Forces helped the Government of Maldives in the neutralization of the coup attempt.
  • India was the first to assist Maldives during the 2004 Tsunami as well as the water crisis in Malé in Dec 2014.
    • India had swift dispatch of 30,000 doses of measles vaccine in Jan 2020 to prevent an outbreak in the Maldives.
  • India’s rapid and comprehensive assistance to the Maldives during COVID-19 pandemic further reinforced India’s credentials of being the first responder.
• Security & Defence Cooperation
  • A comprehensive Action Plan for Defence was also signed in April 2016 to consolidate defence partnership.
  • India provides the largest number of training opportunities for Maldivian National Defence Force (MNDF), meeting around 70% of their defence training requirements. India has trained over 1500 MNDF trainees over the past 10 years.
  • Annual Defence Cooperation Dialogue at level of Defence Secretary was initiated in July 2016.
• Development Cooperation
  • The major completed and ongoing development assistance projects executed by India are:
    • Indira Gandhi Memorial Hospital 
    • Maldives Institute of Technical Education (now called the Maldives Polytechnic) 
    • India-Maldives Faculty of Hospitality & Tourism Studies
    • Technology Adoption Programme in Education Sector in Maldives
    • National College for Police and Law Enforcement (NCPLE)
• Infrastructure & Connectivity Projects under Exim Bank Line of Credit of US$ 800 million 
  • The following projects are being implemented under these LoCs: 
    • Water and Sanitation in 34 Islands 
    • Addu Development Project (Roads and Land Reclamation) 
    • Cancer Hospital
    • Gulhifalhu Port project 
    • Hulhumalé Cricket Stadium: During PM visit in June 2019, it was committed that the Stadium will be built under Indian assistance.
• Greater Male Connectivity Project
  • The project aims to connect Male to Villingili, Gulhifalhu and Thilafushi islands through a series of bridges, causeways and roads. 
  • It is funded through a separate $ 400 million LoC and $ 100 million grant from India.
• Bilateral Economic and Trade Relations
  • India emerged as Maldives’ 2nd largest trade partner in 2022 & the largest in 2023. 
  • India-Maldives bilateral trade in 2023-24 touched almost $1billion with India’s exports at $892 million and imports at $86.84 million.
  • In November 2022, amid the economic challenges faced by the Maldives, India handed over a financial assistance of US$ 100 million. 
  • In December 2022, the RBI signed a Currency Swap Agreement with the Maldives Monetary Authority (MMA) under the SAARC Currency Swap Framework.
    • This enabled MMA to make drawls in multiple tranches up to a maximum of USD 200 million from the RBI.
• Tourism
  • In 2023 alone, among the tourists who travelled to the Maldives, Indians formed the largest group of tourists with over 200,000 travellers.
• Indian Community
  • Indians are the second largest expatriate community in Maldives with an approximate strength of around 22,000. 
  • About 25% of Doctors and Teachers in Maldives are Indian nationals.

Visit of President of Maldives to India

• Muizzu's visit comes amid strained ties following his election victory last year, which was marked by an ‘India Out’ campaign opposing India's military presence in the Maldives.
  • Muizzu's current stance emphasizes mutual respect, non-interference, and collaboration, signaling a significant shift from his earlier anti-India rhetoric.
• During his five-day visit to India, Muizzu will discuss strengthening ties and addressing the Maldives' fiscal challenges, as the country faces the risk of a debt default. 
  • With its foreign exchange reserves down to $440 million and substantial debt repayments due in 2025 and 2026, the Maldives has received a credit rating downgrade from Moody's.
• India has already extended $1.4 billion in financial support to the Maldives for various infrastructure projects, and the visit is seen as an opportunity to reinforce bilateral cooperation.

Q.1. What are the key areas of discussion during President Mohamed Muizzu’s visit to India?

President Muizzu’s visit focuses on seeking financial aid for the Maldives’ economic challenges, enhancing bilateral cooperation, and strengthening India-Maldives relations, particularly in strategic areas such as the Indian Ocean Region and infrastructure development.

Q.2. How does the Maldives' debt crisis impact its relationship with India?

The Maldives faces a potential debt default, with foreign exchange reserves dropping significantly. India has offered $1.4 billion in financial support, and President Muizzu’s visit underscores the importance of this aid in addressing the nation’s economic challenges and reinforcing diplomatic ties.

Source: Maldives President Muizzu meets PM Modi today, says India aware of fiscal situation, will ease burden | MEA | The Hindu Businessline