By P.K.Balachandran
Colombo, October 8: There were two major outcomes of the official visit of the Maldivian President Mohamed Muizzu to India: New Delhi has brought Male under its security umbrella and has backed it up with a financial bonanza to help Maldives meet its development needs and debt repayment obligations.
President Muizzu had talks with Indian Prime Minister Narendra Modi on October 7 and would visit Agra, Mumbai and Bengaluru before going back to Male.
Security Dimension
On the security dimension, the Indo-Maldivian Vision Document had the following things to say:
India and Maldives share common challenges in the Indian Ocean Region which have multi-dimensional implications for the security and development of both the countries. As natural partners, they resolve to work together in advancing the maritime and security cooperation for the benefit of peoples of both India and Maldives as well as for the larger Indian Ocean Region.
Maldives, with its vast Exclusive Economic Zone, is exposed to traditional and non-traditional maritime challenges including piracy, IUU fishing, drug smuggling, and terrorism. The two countries agreed that India, as a trusted and dependable partner, will work closely with Maldives in sharing of expertise, augmenting capabilities and undertake joint cooperative measures, as per needs and requirements of Maldives; they also agreed that the ongoing Maldives National Defence Force (MNDF) ‘Ekatha’ harbour project at Uthuru Thila Falhu (UTF), with India’s assistance, will significantly contribute towards enhancing MNDF’s operational capabilities, and agreed to extend full support for its timely completion.
The two sides also agreed:
i. To support Maldives with provisioning of defence platforms and assets to augment capabilities of the MNDF as well as that of the Government of Maldives in advancing its maritime and security requirements in line with its national priorities;
ii. To support Maldives in enhancing surveillance and monitoring capability of MNDF with the provisioning of radar systems and other equipment;
iii. To support Maldives on Hydrographic matters, including through capacity building and training, as per the requirements of the Government of Maldives (It is to be noted that, earlier, Muizzu had wanted an existing India-aided hydrographic survey project to be re-examined);
iv. To strengthen cooperation in the area of disaster response and risk mitigation, including through development of SOPs and exercises to achieve enhanced interoperability;
v. To assist Maldives in the domain of information sharing by supporting the development of capabilities through infrastructure, training and sharing of best practices;
vi. To inaugurate at an early date the state-of-the-art Maldivian Ministry of Defence (MoD) building in Malé, constructed with India’s assistance, that will augment modern infrastructural capacity of the MoD;
vii. To increase capacity building & training slots for MNDF, Maldives Police Services (MPS), and other security organizations of Maldives under the ITEC programmes and other customized training programmes in India;
viii. To extend financial assistance to develop and upgrade MNDF infrastructure.
Welcoming the comprehensive Indian security initiatives, President Muizzu said: “India is an important partner in the maritime security domain due to geographical proximity.”
In the media interaction after the formal talks, Prime Minister Modi said that India has always acted as the “first-responder” for the Maldives. “Be it essential commodities for the people of the Maldives, providing drinking water during natural disasters, delivering vaccines during the Covid pandemic, India has consistently upheld its responsibilities as a neighbour,” he said.
“We have discussed opening a new Indian consulate in Addu and a new Maldivian consulate in Bengaluru. All these initiatives will strengthen our people-to-people ties. Together, we will strive for stability and prosperity in the Indian Ocean region,” Modi added.
Welcoming the Indian initiatives, President Muizzu’s said that India is “an important partner in the maritime security domain due to geographical proximity.”
Eye on Addu Atoll
India is already fixated on securing a presence on Addu Atoll in south Maldives, which is strategically located. India is likely looking to draft it into its outer defence perimeter in the Western Indian Ocean.
In August, India’s External Affairs Minister S. Jaishankar had said that India had already invested around US$ 220 million in Addu. It had partnered with Maldives on the Addu Reclamation and Shore Protection Project to find a sustainable way to develop Addu as a regional hub.
With Indian funding, Maldives is redeveloping the Gan International Airport, a connectivity project with an outlay of US$ 29 million that will bridge the gap between Addu atoll and Maldives and the rest of the world. It will boost tourism in Gan and southern atolls.
Commenting on India’s interest in Addu Atoll, Dr.David Brewster of Australian National University said: “For decades since the British departed, India has tried to secure access to Addu, or at the least to keep other potentially hostile powers out. In the late 1970s, New Delhi saw off attempts by the Soviets and even Iran to build military outposts there. Growing major power competition in the Indian Ocean makes that imperative even stronger today.”
“New Delhi is nor working to entrench itself as Maldives’ key security partner, providing training to the Maldives defence force, giving an aircraft and helicopters and, most recently, helping to build a major new Coast Guard facility near Male. Maldives has been made a participant in the Colombo Security Dialogue,” he added.
Economic Agreements
Prime Minister Modi told the media that India is the “closest neighbour and a steadfast friend” of the Maldives, and will continue to extend assistance in areas ranging from development cooperation to defence and infrastructure development.
“This year, the SBI (State Bank of India) has rolled over treasury bills worth $100 million for the Maldives. Today, according to the need of the Maldives, a currency swap agreement of $400 million and Indian rupee (INR) 30 billion) has been concluded,” Modi said.
Currency Swap
The currency swap arrangement, Muizzu said, will be “instrumental in addressing the foreign exchange issues we are facing right now”. There was also a shared commitment to “remain engaged on further measures that will bolster the Maldives’ economic resilience and stability.”
The currency swap arrangement has two elements – the Maldives Monetary Authority (MMA) is eligible for financing support from the Reserve Bank of India (RBI) worth US$ 400 million under the dollar/euro swap window, and INR 30 billion under the INR swap window, the RBI said in a statement.
The agreement will be valid till June 2027 to provide a backstop line of funding for short-term foreign exchange liquidity requirements or short-term balance of payments stress till longer-term arrangements are made.
In May and September, SBI rolled over its subscription to Maldivian treasury bills worth a total of US$ 100 million so that the country would not default on its Islamic bond payments
FTA
On a Free Trade Agreement (FTA) Prime Minister Modi said: “To strengthen our economic ties, we have decided to initiate discussions on a free trade agreement. We will also work on trade settlements in local currencies. We will continue to provide all possible support for the progress and prosperity of the people of the Maldives.”
In his remarks President Muizzu said conclusion of the proposed Free Trade Agreement will facilitate an increase in Indian investments in tourism and various sectors of development.
Muizzu, who came to power on the back of an “India Out” election campaign last year and took several steps to move his country closer to China and to reduce its dependence on India, acknowledged India as a key partner for socioeconomic and infrastructure development that “has stood by the Maldives during our times of need”.
He added, “The Maldives will remain a true friend, committed to our shared vision of peace and development in our countries and our region.”
Following their talks, Modi and Muizzu jointly launched India’s RuPay Card in the Maldives to boost tourism and economic cooperation and inaugurated the new runway of Hanimaadhoo international airport that was built with an Indian line of credit of US$ 132 million.
The Indian side also handed over 700 out of 4,000 housing units being developed with Indian aid to overcome a housing shortage.
Foreign secretary Vikram Misri told a media briefing that the Maldivian side made “a number of other points and requests” regarding financial assistance that will be examined by New Delhi.
Acrimony Left Behind
The outcomes from the bilateral meeting marked a significant turnaround from a particularly acrimonious phase in the relationship between New Delhi and Male, the Indian media reported.
Ties fell to an all-time low after Muizzu demanded India withdraw more than 80 Indian military personnel deployed in the archipelago to operate three aircraft and then took steps to bolster defence and military cooperation with Turkey and China.
However, there were signs of a thaw when Muizzu was among seven regional leaders invited to Modi’s swearing-in in June. By then, India had replaced the military personnel with civilian experts and work had also continued on several India-funded development projects. Back-to-back visits by the foreign ministers of the two sides also helped smooth over irritants, and two Maldivian deputy ministers, who created a controversy with online posts seen as derogatory to Modi, resigned last month, media reports recalled.
Indians Tourist Inflow
India was the biggest source market for tourism to the Maldives in 2023, accounting for over 11% of the 1.8 million tourist arrivals. However, the impact of the controversy started to show a negative impact, with India ranking at No. 6 in July 2024, registering 71,381 travellers, a 42.5% drop from the previous year, Indian Express reported.
Data released by the Maldives tourism ministry shows that Indians numbered only 28,604 in the April to June quarter this year, compared to 54,207 in the same period last year.
Meanwhile, China claimed the top spot with 1.2 lakh tourists in the first six months of 2024. Indians, on the other hand, were only 63,450.
When the Lakshadweep controversy broke, Indian travel tech company EaseMyTrip announced that they “indefinitely suspended all travel bookings to the Maldives”. Last Friday, as Muizzu’s India visit was announced, EaseMyTrip resuming bookings to the Maldives, Indian Express said.
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