In a bold move to reshape the balance of power in the Indian Ocean, Indian Prime Minister Narendra Modi and Maldivian President Mohamed Muizzu sealed a landmark agreement on October 7, 2024. With a focus on defense, trade, and energy security, the leaders charted a future of unprecedented cooperation, setting the stage for a robust economic and maritime security partnership aimed at stabilizing the region. India reaffirmed its unwavering support, while the Maldives acknowledged India’s pivotal role in its financial recovery and national security.
Economic Lifeline: India’s Critical Financial Assistance
India’s continued financial support has been vital in helping the Maldives manage its economic challenges. In a timely move, India rolled over USD 100 million worth of T-bills in May and September 2024, providing much-needed relief. Additionally, Modi’s announcement of a USD 400 million currency swap agreement and INR 30 billion financial package further reinforced India’s role as a steadfast partner in Maldives’ economic recovery.
President Muizzu expressed gratitude for India’s role as a “First Responder” during crises such as the 2014 water shortage in Malé and the COVID-19 pandemic. The leaders agreed to further measures aimed at supporting Maldives’ economic stabilization and ensuring the continuation of vital developmental projects, including affordable housing and infrastructure development across ports and airports.
Bolstering Maritime Security in the Indian Ocean
A key focus of the talks was enhancing maritime security cooperation between India and Maldives. Both nations face common threats, including piracy, illegal fishing, drug trafficking, and terrorism, all of which require coordinated responses. With its vast Exclusive Economic Zone (EEZ), the Maldives is on the front line of these challenges.
India has committed to providing defense platforms and advanced surveillance systems to bolster the operational capabilities of the Maldives National Defence Force (MNDF). This includes the timely completion of the MNDF ‘Ekatha’ harbour project at Uthuru Thila Falhu (UTF), a vital initiative supported by India to enhance Maldives’ maritime security infrastructure.
The agreement goes beyond traditional defense assistance. India and Maldives will also work together on hydrography and disaster response, further cementing their role as natural partners in maintaining stability in the Indian Ocean Region (IOR). Capacity building, training programs, and additional funding for the MNDF are also on the agenda, ensuring that the Maldives is equipped to handle both current and future security challenges.
Driving Trade and Investment: A New Frontier
On the economic front, both leaders acknowledged the untapped potential for increased trade and investment between their countries. A major step forward is the initiation of discussions on a Bilateral Free Trade Agreement (FTA) that would simplify trade in goods and services, potentially boosting economic cooperation to new heights.
The decision to operationalize local currency trade settlements between India and the Maldives marks a significant milestone. By reducing dependency on foreign currencies, both nations aim to strengthen trade linkages and economic resilience. This move is expected to benefit sectors like agriculture, fisheries, and tourism, which remain the backbone of the Maldivian economy.
In line with Maldives’ focus on economic diversification, the two countries will also collaborate on agriculture and fisheries, key areas that hold significant potential for growth. Plans are in place to establish an Agriculture Economic Zone in Haa Dhaalu atoll and a fish processing facility in Haa Alifu atoll, leveraging India’s expertise and investment.
Energy Security: A Future Powered by Renewables
Energy security featured prominently in the discussions, with both leaders agreeing that renewable energy cooperation would be crucial in addressing Maldives’ high energy costs and its commitment to achieving its Nationally Determined Contributions (NDCs) under the Paris Agreement.
India, with its expertise in solar power, will partner with the Maldives on various renewable energy projects aimed at driving down energy costs and reducing reliance on traditional energy sources. This collaboration also includes exploring Maldives’ participation in India’s ambitious “One Sun, One World, One Grid” initiative, aimed at interconnecting global solar energy grids.
Additionally, both sides committed to joint research, capacity building, and exchange of expertise on energy efficiency. These initiatives are expected to foster sustainable development while helping Maldives transition to a greener future.
Deepening Political and Digital Cooperation
The meeting also paved the way for enhanced political engagement. To strengthen democratic ties, the two nations plan to sign a Memorandum of Understanding that will institutionalize cooperation between their parliaments, including exchanges between parliamentarians and local representatives.
In the digital domain, India’s Unified Payments Interface (UPI) and other digital services will be introduced in the Maldives, boosting e-governance and financial inclusion. The leaders welcomed the launch of the RuPay card in the Maldives, making payments easier for Indian tourists and residents, and vowed to explore further collaborations in the financial and digital sectors.
Health and Human Security: A People-Centric Approach
Health cooperation remains a critical area of partnership between India and Maldives. Both nations are committed to improving healthcare infrastructure and access to essential services. The establishment of India-Maldives Jan Aushadhi Kendras, offering affordable medicines across the Maldives, is set to enhance health security.
In addition to healthcare, the two countries will collaborate on mental health services, drug rehabilitation programs, and medical evacuations, further cementing their people-centric approach to development.
The Road Ahead: A Comprehensive Security and Economic Partnership
The discussions between Modi and Muizzu signal a new chapter in India-Maldives relations, defined by a Comprehensive Economic and Maritime Security Partnership. As India continues to support Maldives in its developmental and security needs, both nations are poised to play a crucial role in maintaining peace and stability in the Indian Ocean Region.