About India and Maldives Agreements: UPSC Current Affairs

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Context:

India and the Maldives have signed several important agreements to strengthen their bilateral relations.

Highlights of the Recent Agreements and Initiatives

Currency Swap Agreement: India and the Maldives signed a currency swap agreement worth USD 400 million. This agreement aims to help the Maldives manage its foreign exchange reserves more effectively.
Free Trade Agreement (FTA) Talks: Both countries have agreed to initiate discussions on a Free Trade Agreement to enhance economic ties.
Launch of RuPay Card: The Prime Minister of India and the Maldivian President launched the RuPay card in the Maldives, which will facilitate easier financial transactions between the two countries.
Infrastructure Projects: Several infrastructure projects were inaugurated, including the new runway at Hanimadhoo International Airport. India handed over 700 social housing units to the Maldives, built under the EXIM Bank’s buyer’s credit facilities.
Greater Male Connectivity Project: The Indian Prime Minister announced that the Greater Male Connectivity Project would be expedited, and India would support the development of a new commercial port in Thilafushi.
Economic and Maritime Security Partnership: The Indian Prime Minister emphasized a comprehensive economic and maritime security partnership to give strategic direction to their cooperation.
Budgetary Support: India extended vital budgetary support to the Maldives, including the rollover of a USD 50 million Treasury Bill for another year.

These steps are part of a broader effort to reset and strengthen the bilateral relationship, which had faced challenges due to political tensions and economic issues in the Maldives.

India-Maldives Relations

The Maldives is located south of India’s Lakshadweep Islands in the Indian Ocean, making the two countries natural maritime neighbours.

Background

Maldives gained independence from British rule in 1965. India was one of the first countries to recognize the Maldives’ independence and established diplomatic relations in 1966.
In 1976, India and the Maldives signed a maritime boundary treaty to mutually decide their maritime boundaries. This treaty placed Minicoy Island on the Indian side of the boundary.
India and the Maldives signed a comprehensive trade agreement in 1981, which laid the foundation for robust economic ties.
Both nations became the founding members of the South Asian Association for Regional Cooperation (SAARC) established in 1985, which further strengthened their economic and regional cooperation.
In 1988, India launched Operation Cactus to prevent a coup attempt in the Maldives. Indian forces successfully restored order, highlighting India’s role as a security provider in the region.
India provided significant humanitarian assistance to the Maldives following the 2004 Indian Ocean tsunami and the 2014 water crisis in Malé. These actions reinforced India’s role as a reliable neighbour.

About Maldives
Location	The Maldives is a small island nation in the Indian Ocean, located southwest of India and Sri Lanka.
Capital City	Malé
Official Language	Dhivehi
Currency	Maldivian Rufiyaa (MVR)
Major Religion	Islam (It is the official religion, and all Maldivians are required by law to be Muslim.)
Government Type	Presidential Republic
Tourism	The Maldives is famous for its beautiful beaches, luxury resorts, and coral reefs, making tourism a major part of its economy.
Main Exports	Fish (especially tuna), coconuts, and tourism services.
Climate	The Maldives has a tropical climate, with warm temperatures all year round. It also experiences two monsoon seasons: wet and dry.
Challenges	The Maldives faces threats from climate change, especially rising sea levels, as most of its islands are very low-lying.
Unique Fact	The Maldives is made up of about 1,200 islands, but only around 200 are inhabited.

Key Areas of Cooperation

Political and Strategic Ties

Regular high-level exchanges between leaders of both countries have strengthened political ties. These visits often result in agreements and initiatives that enhance bilateral cooperation.
India has been a key security partner for the Maldives. This includes joint military exercises like “Ekuverin” and “Dosti,” and assistance during crises such as the 1988 coup attempt and the 2014 water crisis in Malé.

Economic and Developmental Assistance

India has provided significant financial assistance to the Maldives, including emergency financial aid and currency swap agreements. Recently, India announced a $400 million support package to help the Maldives tackle its ongoing financial challenges.
India is involved in several major infrastructure projects in the Maldives, including the Greater Malé Connectivity Project, which aims to link the capital with nearby islands through a sea bridge, and the construction of the Maldivian Ministry of Defence building.
India-Maldives bilateral trade in 2023-24 touched almost $ 1 billion with India's exports at $892 million and imports at $86.84 million.
Indian Exports to the Maldives:
- - India exports a significant amount of petroleum products to the Maldives, which are essential for the island nation’s energy needs.
  - India supplies various food items, including rice, wheat, and vegetables, to the Maldives.
  - Indian machinery and equipment are crucial for the Maldives’ infrastructure and development projects.
Maldivian Exports to India:
- - The Maldives exports fish and fish products, which are a major part of its economy.
  - Other exports include minerals and textiles, though these are on a smaller scale compared to fisheries.
The launch of the RuPay card in the Maldives aims to facilitate easier financial transactions and boost economic ties between the two countries.
India and the Maldives have started discussions on a potential Free Trade Agreement (FTA). This agreement could significantly enhance bilateral trade by reducing tariffs and other trade barriers.

Maritime and Security Cooperation

India and the Maldives have committed to enhancing maritime security cooperation. This includes joint surveillance and patrolling of the Indian Ocean Region to ensure the safety and security of maritime routes. India has assisted in building and modernizing defence infrastructure in the Maldives, such as the state-of-the-art Maldivian Ministry of Defence building.

Environmental and Climate Change Cooperation

Both countries are working towards sustainable development goals. India supports the Maldives in tackling climate change and environmental challenges, given the Maldives’ vulnerability to rising sea levels. India has been involved in renewable energy projects in the Maldives, promoting the use of solar energy and other sustainable practices.

Challenges in India-Maldives Relations

The Maldives’ growing ties with China have introduced new dynamics into its relationship with India. China’s investments in the Maldives, particularly in infrastructure projects, have raised concerns in India about Beijing’s strategic intentions in the Indian Ocean Region.
The Maldives has experienced political instability, which can affect bilateral relations, as different administrations may have varying foreign policy priorities. A fragile democracy can be susceptible to radical ideologies if not effectively governed.
Despite close ties, bilateral trade between India and the Maldives remains relatively low. There is no Free Trade Agreement (FTA) between the two countries, which limits the potential for economic integration.
There have been instances of anti-Indian sentiments in the Maldives, highlighted by the “India-Out” campaign. This campaign calls for reducing Indian influence in the country and has created diplomatic challenges.
The Maldives is one of the most vulnerable countries to climate change, facing threats from rising sea levels and extreme weather events. While India supports the Maldives in tackling these challenges, the scale and urgency of the problem require sustained and coordinated efforts.

Way Forward for India-Maldives Relations

Both countries should continue to enhance maritime security cooperation to ensure the safety of the Indian Ocean Region. This includes joint surveillance, patrolling, and sharing of maritime intelligence.
India can assist in modernizing the Maldivian defence infrastructure and provide training to Maldivian defence personnel. Joint military exercises like “Ekuverin” and “Dosti” should be expanded to include more comprehensive drills.
Exploring the possibility of a Free Trade Agreement can significantly enhance bilateral trade by reducing tariffs and other trade barriers. This will help diversify the Maldivian economy and create new opportunities for Indian businesses.
Joint efforts on climate action can help mitigate the impacts of rising sea levels and extreme weather events. Strengthening cooperation in disaster management and response can ensure timely and effective assistance during natural calamities.
India can assist in building the Maldives’ capacity in various sectors, including healthcare, education, and governance. This will contribute to the overall development and stability of the Maldives.
The Maldives should aim to balance its relations with major powers like India and China. India can play a supportive role by providing alternatives to Chinese investments and ensuring that the Maldives’ sovereignty and strategic autonomy are respected.

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Source:

The Hindustan Times

PRACTICE QUESTION

Q.In what ways can India address the growing influence of China in the Maldives while maintaining a positive and cooperative relationship with the Maldivian government? (150 words)

KEY AGREEMENTS SIGNED BETWEEN INDIA AND MALDIVES