Daily News Analysis

India-Pledged Support to Maldives Amid Economic Issues

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India-Pledged Support to Maldives Amid Economic Issues

Context: The Foreign Minister of the Maldives is on a three-day visit to India, aimed at strengthening bilateral ties, particularly focusing on trade, investment, and addressing economic challenges facing the Maldives.

Maldives & Its Strategic Importance

  1. Strategic Location: The Maldives holds significant strategic value, being positioned in the Indian Ocean. Its geographical placement along critical maritime trade routes between the Gulf of Aden and the Strait of Malacca makes it a crucial point for global trade, particularly for India.

  2. Trade Routes: The Maldives functions as a “toll gate” for maritime trade, facilitating the passage of nearly half of India’s external trade and 80% of its energy imports. Its stability directly impacts the broader security and trade interests of India.

  3. Countering China's Influence: The Maldives offers an opportunity for India to counterbalance China’s increasing influence in the Indian Ocean region, which is vital for regional stability and the balance of power.

India-Maldives Bilateral Relations

  1. Regional Cooperation:

    • Both nations are founding members of SAARC (South Asian Association for Regional Cooperation) and other regional forums like the South Asian Economic Union. They are also signatories of the South Asia Free Trade Agreement.

  2. Economic Partnership:

    • India became the Maldives' largest trade partner in 2023.

    • India is also one of the largest investors and a key source of tourism for the Maldives. India accounts for about 11.8% of the Maldives' tourism market.

    • Infrastructure projects like the Greater Male Connectivity Project (GMCP), a $530 million initiative, aim to enhance connectivity between Male and neighboring islands, which will support economic growth, particularly the development of Gulhifalhu Port.

  3. Defense and Security Cooperation:

    • Since 1988, defense and security cooperation have been vital. India provides significant training and assistance to the Maldives, with estimates suggesting that 70% of Maldives' defense training is conducted by India.

    • A comprehensive Defense Action Plan was signed in 2016 to further consolidate security partnerships.

 

Challenges in India-Maldives Relations

  1. Domestic Political Instability:

    • The Maldives has faced political upheavals and government changes, creating uncertainties that complicate long-term collaboration and project implementation.

  2. Chinese Influence:

    • China's economic footprint in the Maldives has been growing, with substantial investments in infrastructure and lending schemes that critics claim lead to debt-trap diplomacy, which poses a challenge to India's strategic interests.

  3. Non-traditional Security Threats:

    • Issues such as piracy, terrorism, and drug trafficking continue to be pressing concerns in the region, requiring close collaboration and intelligence sharing between India and the Maldives.

  4. Trade Imbalance:

    • There exists a significant trade imbalance between the two countries, with calls for a more diversified trade partnership to ensure mutual benefit.

The Way Ahead for India-Maldives Relations

  • Geopolitical Dynamics: The relationship between India and the Maldives is shaped by both geopolitical realities and leadership changes. Despite challenges, India remains committed to supporting the Maldives in various sectors.

  • Strengthening Bilateral Ties: Through economic support, security cooperation, and strategic infrastructure projects, India can continue to foster a resilient, mutually beneficial partnership with the Maldives.

  • Addressing Challenges: By recognizing and addressing issues like domestic instability, trade imbalances, and external influences, India and the Maldives can work towards a more stable and prosperous future, enhancing regional security and promoting shared prosperity in the Indian Ocean region.

Conclusion:

India’s support to the Maldives reflects a longstanding commitment to regional stability, security, and economic cooperation. Despite challenges, both nations have the opportunity to build on their strategic relationship, contributing to a stable and prosperous South Asian region.


 

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