A $400 million currency swap arrangement between India and Maldives is a major step towards reviving their bilateral relationship. This agreement, aimed at helping the Maldives navigate its foreign exchange challenges, marks the first state visit of Maldivian President Mohamed Muizzu to India since he took office in November 2023.
Key Developments in Bilateral Relations
During his four-day visit, President Muizzu engaged in discussions with Prime Minister Narendra Modi at Hyderabad House in New Delhi. Their talks focused on bolstering ties that had experienced tension in the past year. The two leaders launched the Rupay card in the Maldives, inaugurated a new runway at the Hanimaadhoo International Airport, and discussed various initiatives to enhance cooperation.
Prime Minister Modi expressed his commitment to a “comprehensive economic and maritime security partnership,” recognizing the Maldives as a close friend with an essential role in India’s neighborhood policy. “India has always fulfilled the responsibilities of a neighbor,” he said, highlighting India’s historical support for the Maldives.
Economic Support and Infrastructure Development
The currency swap agreement is complemented by India’s announcement of additional financial assistance amounting to ₹30 billion (approximately $360 million). This support comes at a crucial time for the Maldives, which is grappling with an economic downturn. Modi highlighted ongoing projects, including the rollout of a new commercial port in Thilafushi and the accelerated Greater Male Connectivity Project.
Apart from these measures, India has extended significant financial assistance by extending a ₹50 million Treasury Bill for an additional year. The Prime Minister underlined India’s role as a “first responder” during times of crisis, referencing the support provided during the COVID-19 pandemic and ongoing water supply initiatives across 28 islands.
First of all, I extend a hearty welcome to President Muizzu and his delegation. India and Maldives relations are centuries old. India is Maldives' nearest neighbour and close friend. Maldives holds an important position in our neighbourhood policy and SAGAR vision. India has… pic.twitter.com/H4qNrJV6T2
— DD India (@DDIndialive) October 7, 2024A Shift in Diplomatic Stance
Muizzu’s recent visit reflects a shift from the more critical stance he adopted during his campaign, which emphasized an “India Out” policy. Since taking office, he has toned down anti-India rhetoric and dismissed ministers who had made derogatory comments about India and Prime Minister Modi. This visit is seen as an effort to mend relations and rebuild trust.
The Maldivian President reiterated his commitment to maintaining a strong partnership with India, emphasizing that his government would not take actions to undermine India’s security. “As we expand our collaboration with other nations, we are dedicated to making sure that our actions do not jeopardize the security and stability of our region,” he said.
Future Cooperation: Free Trade Agreement on the Horizon
One of the pivotal outcomes of the talks was the decision to initiate discussions on a Free Trade Agreement (FTA). This agreement is expected to further strengthen economic ties and facilitate increased trade and investment between the two nations. President Muizzu expressed hope that the FTA would enhance opportunities for Indian tourists, a vital source of revenue for the Maldives.
A Ceremonial Welcome and Cultural Engagement
Muizzu’s visit was marked by a ceremonial welcome at the Rashtrapati Bhawan, hosted by President Droupadi Murmu, with Prime Minister Modi in attendance. The Maldivian leader also paid his respects at Rajghat, the memorial of Mahatma Gandhi, underscoring the cultural and historical ties between the two nations.
In order to expand chances for business cooperation, Muizzu is also expected to attend business gatherings in Bengaluru and Mumbai during his tour. His trip is seen as an important step toward resetting diplomatic and economic relations that had been strained in the past.
Looking Ahead: A Commitment to Partnership
President Muizzu thanked India for its continued assistance as he wrapped up his talks with Indian officials. He acknowledged that the financial assistance, alongside the currency swap agreement, would be instrumental in addressing the Maldives’ foreign exchange challenges.
Looking to the future, Muizzu has extended an invitation to Prime Minister Modi to visit the Maldives next year to celebrate the 60th anniversary of diplomatic ties. This gesture signifies a renewed commitment to collaboration and partnership, fostering a sense of stability and mutual respect between the two nations.
In summary, the recent developments in India-Maldives relations reflect a concerted effort to overcome previous tensions and build a stronger, more cooperative future. With economic support, infrastructure projects, and plans for deeper trade ties on the table, both countries are poised to enhance their partnership, ensuring stability and growth in the region.
