India extends USD 400 m assistance to Maldives
India Provides USD 400 Million Assistance to Maldives After Thaw in Ties
Introduction India and the Maldives are working towards strengthening their bilateral relationship after a period of strained ties. On Monday, India extended crucial financial assistance of USD 400 million to the Maldives and launched several cooperative initiatives to support the island nation’s development. This marked a significant shift in the bilateral relations that had been on shaky ground, especially after Maldivian President Mohamed Muizzu took office.
Currency Swap Agreement and Development Cooperation To address the financial challenges faced by the Maldives, India and the Maldives inked a currency swap agreement worth Rs 3,000 crore. This deal will help stabilize the Maldivian economy and ease the liquidity crisis. Alongside this, India also agreed to continue supporting development projects in the Maldives, focusing on critical infrastructure such as ports, road networks, schools, and housing.
Inauguration of Key Infrastructure Projects During the visit of President Muizzu to India, the two countries also inaugurated the RuPay card system in the Maldives, a move that is expected to enhance digital transactions between the two nations. Prime Minister Narendra Modi also highlighted the upcoming linkage of UPI (Unified Payments Interface) with the Maldives to further strengthen financial ties.
In addition to this, the two leaders jointly inaugurated the newly developed runway at the Hanimaadhoo International Airport. Modi emphasized that India would expedite the Greater Male Connectivity Project and support the development of a commercial port at Thilafushi Island, aiming to boost the Maldives’ cargo handling capacity.
Vision for Comprehensive Economic and Maritime Security Partnership Both nations agreed to a new framework titled ‘A Vision for Comprehensive Economic and Maritime Security Partnership.’ This strategic framework aims to deepen cooperation in economic and maritime security, ensuring that both India and the Maldives play a pivotal role in ensuring stability in the Indian Ocean Region.
Support for Housing Projects and Social Infrastructure India handed over 700 social housing units in Hulhumale, developed under the EXIM Bank’s buyer’s credit facilities. These housing projects are expected to play a key role in improving living conditions in the Maldives and tackling housing shortages.
Development of Transhipment and Bunkering Services India and the Maldives have also agreed to explore collaboration on developing transhipment facilities and bunkering services. This development will contribute to the Maldives’ “Economic Gateway” project and expand economic activity on Ihavandhippolhu and Gaadhoo islands.
Agriculture, Tourism, and Fish Processing Investments With Indian assistance, the Maldives plans to establish an ‘Agriculture Economic Zone’ and invest in tourism in the Haa Dhaalu Atoll. Another significant venture includes developing a fish processing and canning facility in the Haa Alifu Atoll, further strengthening the Maldives’ economy.
Initiation of Free Trade Agreement Discussions Prime Minister Modi announced that both nations have decided to begin discussions on a Free Trade Agreement (FTA). This step will aim to boost economic ties by facilitating smoother trade and investment flows between India and the Maldives.
Historical Context and Diplomatic Shifts The relationship between India and the Maldives has faced challenges, especially with President Muizzu’s pro-China stance. After being elected to office in November last year, Muizzu led an ‘India Out’ campaign, urging the removal of Indian military personnel stationed in the Maldives. However, since assuming office, Muizzu has softened his anti-India rhetoric, even removing ministers critical of Prime Minister Modi. This thaw in relations was crucial in resetting bilateral ties.
Continued Support Amid Economic Downturn With the Maldives facing a severe economic downturn, India has stepped in to provide vital budgetary support, including the rollover of a USD 50 million Treasury Bill. This assistance has been crucial for the Maldives, which has been grappling with financial constraints amid global economic challenges.
Conclusion India’s decision to extend USD 400 million in assistance and sign a currency swap agreement with the Maldives signifies the revival of a close partnership. By focusing on development cooperation, infrastructure projects, and economic stability, India and the Maldives are paving the way for a stronger bilateral relationship. These initiatives reflect India’s commitment to fostering close ties with its neighbors, ensuring both nations benefit from shared prosperity and security in the Indian Ocean Region.
Disclaimer: The information in this article is based on recent developments and official statements regarding India-Maldives relations. While efforts have been made to ensure accuracy, international relations are subject to change based on geopolitical and economic factors.