OCTOBER 7, 2024- India and the Maldives have taken a significant step toward mending fractured relations with the announcement of a $400 million (₹3,000 crore) currency swap deal during Maldivian President Mohamed Muizzu’s first official state visit to New Delhi. The move marks a positive shift in diplomatic ties that had been strained by two high-profile disagreements over the past year, including critical comments by Maldivian ministers about Prime Minister Narendra Modi.
President Muizzu, who arrived in New Delhi on Sunday evening, was received with a ceremonial welcome by President Droupadi Murmu and Prime Minister Modi at the Raj Bhavan on Monday. The Maldivian leader paid tribute to Mahatma Gandhi at Rajghat before engaging in discussions with the Prime Minister to reset relations. At the joint press briefing, PM Modi reaffirmed India’s commitment to its “Neighbourhood First” policy and underscored New Delhi’s role as a reliable partner to the Maldives.
Whether it’s providing essential commodities, vaccines during Covid, or ensuring clean drinking water, India has always been a good neighbour, Modi said. He highlighted the successful inauguration of the Hanimaadhoo International Airport in the Haa Dhaalu Atoll, the handover of 700 social housing units, and the implementation of a drinking water and sewerage project that will benefit nearly 30,000 people across 28 Maldivian islands.
The currency swap agreement is seen as crucial for the Maldives, which is grappling with foreign exchange challenges. Under this arrangement, the two nations will exchange the principal and interest of loans in their respective currencies, thus easing the financial burden on Male. India also extended a $100 million rollover of Treasury bills, reinforcing its support to the island nation.
President Muizzu expressed his gratitude, saying, I am thankful for India’s decision to provide support. The ₹30 billion and the $400 million bilateral currency swap will be instrumental in addressing forex issues right now. The initiative is part of a broader strategy by India to counter China’s influence in the Indian Ocean Region, which has grown significantly over recent years.
This visit by President Muizzu holds particular significance given his perceived “pro-China” stance, and his campaign platform last year that called for the withdrawal of Indian military personnel from the Maldives. The personnel were originally stationed to maintain and operate three aviation platforms gifted by India for humanitarian and medical aid. In response to Male’s request, New Delhi has now replaced military staff with “competent technical” personnel to continue operating these facilities.
Diplomatic sensitivities were also tested earlier this year when a Chinese spy ship, masquerading as a research vessel, docked at the Maldivian port, raising security concerns in New Delhi. Nevertheless, Monday’s announcements signal an intent to move beyond these differences.
Among other outcomes of the bilateral talks was the launch of the RuPay card in the Maldives, a step that will enhance financial connectivity. The two nations are also cooperating on the Greater Male Connectivity Project, a major infrastructure initiative aimed at enhancing connectivity within the capital region.
Overall, the agreements signed and the cordial atmosphere during President Muizzu’s visit reflect a renewed spirit of partnership. Both sides appear committed to stabilizing and strengthening relations in the strategic Indian Ocean Region, where geopolitical rivalry has heightened in recent years.
For now, it seems the bond between New Delhi and Male is on a positive trajectory, underscored by mutual interests in regional security and economic cooperation.