India and Maldives
News
Maldives is facing a debt default as its forex reserves have decreased to $400 million, which is enough only for one and a half months of imports.
The two monetary authorities have entered into a currency swap agreement amounting to USD 400 million under the US Dollar/Euro Swap Window and INR 30 billion under the INR Swap Window.
Concerns
- The President of Maldives, Muizzu, came to power through the “India Out” campaign, and after taking office, Indian troops were told to leave the island.
- Indian forces are seen as expanding on the island, perceived as a security threat and a violation of Maldivian sovereignty.
- Chinese influence and the inclusion of the Maldives in the Belt and Road Initiative (BRI) during Abdulla Yameen’s presidency (2013-2018).
- Cancellation of the Hydrographic Survey Agreement by Maldives.
Significance
- Geo-Strategic: The Maldives is a key maritime neighbor in the Indian Ocean Region, located 300 nautical miles from India and situated in the hub of commercial sea lanes. It is crucial for countering Chinese expansion through their “String of Pearls,” advocating free navigation, and upholding the laws of the sea. Additionally, it provides opportunities for exploring minerals and resources in the seabed, enhancing the Blue Economy.
- Political: India was the first to recognize the independence of Maldives in 1965 and has included it in the “Neighbourhood First” policy. Ibrahim Mohamed Solih, who became President in 2018, stood for an “India First” foreign policy. Both nations are members of the Colombo Security Conclave (CSC), Indian Ocean Rim Association (IORA), SAARC, and SASEC.
- Economic: India is the 2nd largest trading partner of Maldives in 2022 and 2023. The SAARC Currency Swap Framework was signed between the two monetary authorities in 2022.
- Security: Cooperation in fighting piracy, dealing with Islamic radical elements, and securing communication. The Maldives is included in India’s vision for SAGAR (Security and Growth for All in the Region). In 2024, they signed an MoU to train 1,000 Civil Service Officers.
- Defence: India and the Maldives have a Defence Cooperation Dialogue. They conduct two joint defence exercises: Ekuveri (joint military exercise) and Dosti (Coast Guard exercises between India, Sri Lanka, and the Maldives).
- Development: India has offered $1.4 billion for various infrastructure and development projects, including the Greater Male Connectivity Project. Additionally, $800 million has been provided through an EXIM Bank Line of Credit for infrastructure and connectivity projects.
- Tourism: India consistently ranks among the top 5 nationalities contributing to the Maldives’ tourism industry.
- Health: The Maldives was a recipient of COVID-19 vaccines, and in 2020, India provided 30,000 measles vaccines.
- Diaspora: 25% of doctors and teachers in the Maldives are Indians.
