“India Commits ₹6,300 Crore Aid to Maldives, Strengthening Bilateral Ties Amid Economic Challenges”

In a significant move to bolster bilateral relations and assist the Maldives amid its foreign exchange crisis, India has pledged financial support of over ₹6,300 crore. The announcement follows a meeting between Indian Prime Minister Narendra Modi and Maldivian President Mohamed Muizzu, aimed at resetting and enhancing the partnership between the two nations.

During their discussions, Modi and Muizzu explored the potential for a trade agreement and unveiled a vision document that outlines a comprehensive economic and maritime security partnership. This includes crucial measures to strengthen the Maldives’ maritime surveillance capabilities through the provision of Indian radar systems and equipment, as well as increased cooperation in trade, digitalization, and finance.

Addressing the media after their meeting, Modi emphasized India’s role as the “closest neighbour and steadfast friend” of the Maldives, reaffirming the country’s commitment to support its development initiatives. He noted that this year, the State Bank of India (SBI) rolled over treasury bills worth $100 million for the Maldives. Additionally, a currency swap agreement of $400 million, along with ₹3,000 crore (₹30 billion), was finalized to meet the immediate financial needs of the Maldivian government.

“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,” Modi stated.

President Muizzu acknowledged India as a crucial partner in the Maldives’ socioeconomic and infrastructure development, stating that India “has stood by the Maldives during our times of need.” He reiterated his commitment to maintaining a strong partnership focused on peace and development in the region.

The currency swap arrangement is expected to address the Maldives’ pressing foreign exchange issues and provide a backstop line of funding for short-term liquidity requirements until longer-term solutions are implemented. Foreign Secretary Vikram Misri indicated that the Maldivian side had made additional requests for financial assistance, which will be evaluated by New Delhi.

This cooperation marks a notable shift in the India-Maldives relationship, which had experienced tensions in recent years. Following an “India Out” campaign during Muizzu’s election, his administration sought to realign closer ties with Beijing, leading to a demand for the withdrawal of Indian military personnel from the Maldives. However, recent interactions, including Muizzu’s attendance at Modi’s swearing-in ceremony, suggest a thaw in relations, with the replacement of military personnel by civilian experts and continued work on various India-funded projects.

After their discussions, Modi and Muizzu jointly launched India’s RuPay Card in the Maldives to enhance tourism and economic cooperation. They also inaugurated a new runway at Hanimaadhoo International Airport, funded by an Indian line of credit of $132 million, and delivered 700 out of 4,000 housing units being developed with Indian aid to address housing shortages.

The newly established vision for economic and maritime security partnership acknowledges the Maldives’ unique challenges, such as piracy and illegal fishing, and reinforces India’s commitment as a reliable partner in enhancing the Maldives National Defence Force’s capabilities. The two countries signed several memorandums of understanding (MoUs) to facilitate cooperation in areas including policing, anti-corruption, and judicial training, further solidifying their collaborative efforts for mutual benefit.

Sources By Agencies

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