PM State Visit to Maldives

Syllabus: GS2/IR

Context

• ​Prime Minister Modi paid a state visit to Maldives.

About

• The two sides exchanged four Memoranda of Understanding (MoUs) and signed three agreements.
  • Cooperation in several key sectors, including fisheries, aquaculture, tourism, environment, digital solutions, and finalising the terms of reference to launch negotiations of a Free Trade Agreement.
• India agreed to extend a fresh Line of Credit (LoC) of ₹4,850 crore, to support the island as it faces an enduring twin deficit problem. 
  • This is the first time that such credit is being extended to the Maldives in Indian Rupee.
• Both signed an amendatory agreement on reducing the Maldives’s annual debt repayment obligations. 
• Significance: Observers of India-Maldives ties see the renewed collaboration between the countries as a necessary and positive development. 

Brief on India – Maldives Relations

• Participation in Multiple Forums: Both nations are founding members of the South Asian Association for Regional Cooperation (SAARC), the South Asian Economic Union and signatories to the South Asia Free Trade Agreement. 
• Economic partnership: India emerged as the Maldives’ second largest trade partner in 2022 and became the largest trade partner in 2023, with bilateral trade reaching approximately $548 million in 2023.
• Tourism: In 2023, India is the leading source market for Maldives with a 11.8% market share. 
  • In March 2022, India & Maldives agreed for an open skies arrangement which will further improve connectivity between two countries.
• Defense and Security Cooperation: Since 1988, defence and security has been a major area of cooperation between India and Maldives.
  • A comprehensive Action Plan for Defence was also signed in 2016 to consolidate defence partnership.
  • Estimates suggest that almost 70 per cent of Maldives’ defence training is done by India — either on the islands or in India’s elite military academies.
• Connectivity: The Male to Thilafushi Link project, popularly known as the Greater Male Connectivity Project (GMCP), is a USD 530 million infrastructure project aimed at establishing a direct link between the capital city of the Maldives and Thilafushi, an island located in the South Indian Ocean.

Significance of Maldives: 

• Strategic Importance: The Maldives is strategically located in the Indian Ocean, and its stability and security are of interest to India.
• Trade Route: Situated along crucial maritime trade routes between the Gulf of Aden and the Strait of Malacca, the Maldives acts as a “toll gate” for nearly half of India’s external trade and 80% of its energy imports.

• Counterbalancing China: Maldives presents an opportunity for India to counterbalance China’s growing influence in the Indian Ocean, fostering regional balance of power.
• Diplomatic Leverage: Strong bilateral relations with the Maldives enhance India’s leadership role in the Indian Ocean Region (IOR) and in forums like the Indian Ocean Rim Association (IORA).

Challenges:

• Change in Power: Changes in government create uncertainty and complicate long-term cooperation projects.
• Chinese Influence: China’s growing economic presence in the Maldives, evidenced by investments in infrastructure projects and debt-trap diplomacy, is perceived as a challenge to India’s strategic interests in the region.
• Non-traditional threats: Piracy, terrorism, and drug trafficking remain concerns in the region, requiring continuous collaboration and intelligence sharing between India and the Maldives.
• Extremism and radicalization: The Maldives’ vulnerability to religious extremism and radicalization poses a security threat that necessitates joint efforts in countering such ideologies.
• Trade imbalance: The significant trade imbalance between India and the Maldives leads to resentment and calls for diversifying trade partnerships in Maldives.

Way Ahead

• The evolution of India-Maldives relations reflects a combination of geopolitical dynamics, changes in leadership, and shared regional interests. 
• India is steadfast in its commitments towards Maldives and has always walked the extra mile towards building relations. 
• By acknowledging and addressing the challenges, India and the Maldives can navigate the complexities of their relationship and build a stronger, more resilient, and mutually beneficial partnership for the future.

Source: PIB