Lagatar24 Desk
NEW DELHI: India and the Maldives have taken a significant step towards mending diplomatic ties with the announcement of a US$400 million (₹3,000 crore) currency swap agreement. This deal comes as part of Maldives President Mohamed Muizzu’s first state visit to India and is seen as crucial in addressing the foreign exchange reserve issues that have troubled the island nation.
President Muizzu, who arrived in Delhi on Sunday, was welcomed with a ceremonial reception at Raj Bhavan by President Droupadi Murmu and Prime Minister Narendra Modi on Monday. The visit marks an important chapter in resetting the relationship between the two South Asian neighbors, which had faced strains over the past year due to diplomatic tensions.
The currency swap agreement is aimed at stabilizing the Maldives’ financial situation, and it is expected to bolster Male’s reserves amidst growing Chinese influence in the region. India has been acting as a key partner in the Maldives’ development, from providing essential commodities and vaccines during the Covid-19 pandemic to supporting critical infrastructure projects.
Strengthening Bilateral Relations
During the joint press conference, Prime Minister Modi reiterated India’s commitment to its ‘Neighbourhood First’ policy, emphasizing India’s role as a dependable partner for the Maldives. He highlighted the virtual inauguration of the Hanimaadhoo International Airport and the handover of social housing units and water projects, all part of India’s developmental assistance to the island nation.
“Be it essential commodities, vaccines during Covid, or drinking water, we have played the role of a good neighbor,” Modi said.
India and the Maldives also discussed the geopolitical importance of ensuring security in the Indian Ocean Region. This area has been a focal point for concerns regarding China’s influence, especially with the docking of Chinese vessels in nearby ports. Muizzu, often regarded as pro-China, assured that despite his previous ‘India Out’ campaign, he views India as a key partner in securing regional stability.
Controversies Addressed
Muizzu’s rise to power had initially caused unease in New Delhi due to his ‘India Out’ campaign, which sought the removal of Indian military personnel stationed in the Maldives. However, in his statements during this visit, Muizzu clarified that his government’s concerns were not directed against India, but rather focused on ensuring the Maldives remained free from foreign military presence.
“I simply did what the people of Maldives asked of me,” Muizzu said, addressing the concerns over the withdrawal of Indian military personnel.
The docking of a Chinese spy ship in Maldivian waters earlier this year had also raised concerns about the growing influence of China in the region. However, the currency swap deal and the visit signal a positive shift in relations between New Delhi and Male, with both nations reaffirming their commitment to strengthening ties.
Economic Boost and Currency Swap
One of the most significant outcomes of the visit is the $400 million currency swap agreement, which will help Maldives manage its foreign exchange reserves and address its financial challenges. India has also granted a US$100 million rollover of Treasury bills, further demonstrating its support for the Maldivian economy.
“I am thankful for India’s decision to provide support—₹30 billion in addition to US$400 million currency swap—which will be instrumental in addressing forex issues,” President Muizzu said.
Additionally, India and the Maldives announced the launch of the RuPay card in the Maldives, enhancing financial cooperation between the two nations.
The visit, coupled with the agreements signed, indicates a thaw in relations and a renewed focus on collaboration between the two countries. Both sides seem pleased with the outcome, reflecting the growing bonhomie following the diplomatic rifts of the past year.
