After flirting with China, is Maldives back to loving India?

During his recent visit to Sri Lanka, Maldives foreign minister Moosa Zameer acknowledged that ties with India had witnessed rough patches in the initial days of the Mohamed Muizzu-led government but insisted that the two countries resolved the “misunderstandings”.Days later, Zameer expressed gratitude to his Indian counterpart S Jaishankar after New Delhi extended budgetary support to Male with the rollover of the $50 million Treasury Bills. Treasury Bills or T-bills are medium to long-term debt securities issued by the Maldivian government. In a post on X, Zameer said New Delhi’s announcement demonstrates “enduring bonds of friendship between the Maldives and India”. Sincere gratitude to External Affairs Minister @DrSJaishankar and the Government of #India for extending crucial budgetary support to the Maldives with the rollover of USD 50 million Treasury Bill.

This generous gesture reflects the enduring bonds of friendship between…

— Moosa Zameer (@MoosaZameer) September 19, 2024 Zameer’s remark comes amid signs of thaw in the India-Maldives ties, which had nosedived after Maldives President Muizzu, largely seen as a pro-China politician, took office last November.At the request of the Maldivian government, the State Bank of India (SBI) has subscribed the $50 million government T-bills issued by the ministry of finance of the Maldives for a period of one more year upon the maturity of the previous subscription on September 19, the Indian High Commission in the Maldives said in a press release. This is the second rollover granted by India this year, following the first one of the equal amount on May 13. New Delhi has also extended a special quota for the export of essential commodities to the Indian Ocean archipelago for another year, which “reflects India's continued support to the Government and the people of the Maldives”, according to the High Commission. Anti-India stance The Maldives is one of India’s key maritime neighbours in the Indian Ocean Region (IOR) and with respect to overall bilateral ties, including in the areas of defence and security, witnessed an upward trajectory under the previous government in Male. But Muizzu rose to power on an anti-India stance last year. Shortly after he was sworn-in as President, Muizzu demanded the removal of approximately 88 Indian military personnel from his country. These personnel were repatriated from three aviation platforms engaged in humanitarian and medical evacuation operations and replaced by Indian civilians by the May 10 deadline set by President Muizzu. This led to a diplomatic row in January when three Maldivian deputy ministers made derogatory comments about Prime Minister Narendra Modi over his pictures from a visit to Lakshadweep. medium113591354Modi had posted a series of photos on social media showing him snorkelling, strolling on a white-sand beach and lounging in a chair next to turquoise waters in Lakshadweep In the Maldives, some saw this tourism campaign as an attempt to draw visitors away from their country. There were social media posts insulting Indian tourists. In response, Indian politicians, Bollywood stars and cricketers began urging people to turn to Lakshadweep, in a push to promote local holiday destinations. The Maldives officials later deleted their posts and were suspended by the country’s president for posting “derogatory” comments against India, in a bid to control the fallout with New Delhi. Conciliatory tone Unlike his predecessors, who made the first port of call to New Delhi after assuming office, Muizzu travelled to Turkiye first and then to China for his first state visit in January. Since then, many efforts have been undertaken by the Muizzu-led government in order to restore ties with India, which includes several high-level visits. The Maldives President visited India for the swearing-in ceremony of PM Narendra Modi in June. medium113591064In August, external affairs minister S Jaishankar visited the Maldives, where he signed agreements on capacity building and inaugurated six High Impact Community Development Projects (HICDPs). He also met Muizzu and reviewed bilateral relations with foreign minister Zameer. It was during Jaishankar’s visit that Muizzu termed India as “one of the closest” allies and “invaluable" partners, facilitating and providing aid “whenever the Maldives needed it”. Muizzu may pay his first official visit to India soon, his spokesperson announced on September 10. The two sides are looking to finalise a “feasible” date for his trip. The announcement came on a day two of the Maldives’ junior ministers, who were suspended earlier for making derogatory remarks about PM Modi, resigned from government. medium nocaption113590844Why Maldives needs India During his recent visit to Sri Lanka, Zameer said that the Maldives has no plans to seek an International Monetary Fund (IMF) bailout, dismissing the current economic challenges faced by his country as “temporary”. "We have bilateral partners who are very sensitive to our needs and our situation," he said, signalling the government's confidence in addressing its fiscal issues without resorting to external assistance from the IMF. He also highlighted the strengthening of bilateral relations with China and India, noting that these countries have been instrumental in supporting the Maldives. His remarks came in the wake of warnings from credit rating agencies about the Maldives' financial situation. The Maldives owes much of its external debt to China and India. The government's debt servicing commitments amount to $409 million this year, placing additional stress on its already limited foreign currency reserves.How India put differences aside New Delhi has not allowed differences with Male, most notably in defence and security cooperation, to affect work on the $500mn Greater Male Connectivity Project, the largest infrastructure project in the country. All allocation for the Maldives is in the form of grant and not loan. In February, India decided to continue extending financial assistance to Male to ensure that ongoing development projects are completed on time. As part of its ‘Neighbourhood First’ policy, New Delhi revised its budget allocation for the island nation in 2023-24 from ₹400 crore to ₹770 crore. And for 2024-25, it has earmarked ₹600 crore for the Maldives. Then in April, India lifted export restrictions on specific quantities of essential commodities for the Maldives. The Directorate General of Foreign Trade (DGFT) announced that items such as eggs, potatoes, onions, rice, wheat flour, sugar, dal, stone aggregate, and river sand can now be exported to the Maldives as per the bilateral trade agreement for 2024-25. This move allows for the export of these goods without any existing or future restrictions. The permitted quantities for export include potatoes (21,513.08 tonnes), onions (35,749.13 tonnes), rice (1,24,218.36 tonnes), wheat flour (1,09,162.96 tonnes), sugar (64,494.33 tonnes), dal (224.48 tonnes), stone aggregate (one million tonnes), and river sand (one million tonnes). CAPEXIL, the government-backed export promotion council, will oversee the exports of river sand and stone aggregate to ensure compliance with environmental regulations, including obtaining necessary clearances from state authorities. The Indian High Commissioner had announced on social media that these exports were part of a unique bilateral mechanism, with quotas for each item being increased to the highest levels since 1981. Under the 1981 trade agreement, India has emerged as a key trade partner for the Maldives, with a significant increase in trade volume in recent years. The April announcement also included a 5% increase in quotas for eggs, potatoes, onions, sugar, rice, wheat flour, and dal. The quota for river sand and stone aggregates, crucial for the Maldives' construction industry, was raised by 25% to meet the growing demand. Due to limited local resources, the Maldives relies on imports for these materials. With inputs from agencies