MALDIVES IMPORTANCE FOR INDIA
Security
Geostrategic Importance: Located just 700 km from
India’s Lakshadweep Islands and 1,200 km from the Indian mainland, the Maldives holds significant strategic importance. The growing Chinese presence in the archipelago could have major security implications for India.
Indian Ocean Region Dominance: A strong Chinese presence in the Maldives would provide China with a foothold in the Indian Ocean region, enabling them to exert influence over crucial maritime trade routes. Additionally, vital energy supplies from Gulf nations to India pass through this region, further highlighting its strategic importance.
Regional Imbalance: India enjoys significant access and influence in many Indian Ocean island states, including the Maldives, Seychelles, and Mauritius, which has been a point of contention for China. The growing relationship between China and the Maldives could act as a counterbalance to India’s regional influence.
Economic
Indian Expatriates: There are around 25,000 Indian expatriates living in the Maldives, engaged in various professional sectors. Ensuring their security is an important concern for India.
Blue Economy: The Indian Ocean is a major global route for energy and trade. The Maldives sits strategically between two crucial chokepoints, the Strait of Malacca and the Gulf of Aden. This makes the archipelago a vital "toll gate" for maritime trade, and the sustainable management of marine resources is key to India's success in the blue economy.
Tourism: India and the Maldives maintain strong tourism links, with Indian tourists accounting for approximately 10% of the visitors to the Maldives each year.
Currency Swap: On 22nd July 2019, the Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA) signed a Bilateral USD Currency Swap Agreement. In December 2022, India extended a $200 million currency swap facility to the Maldives under the SAARC Currency Swap Framework, further strengthening economic ties.
Trade: India emerged as Maldives’ 2nd largest trade partner in 2022 & the largest in 2023.
The trade between India and Maldives amounted to USD 85.4 million in FY 2024-25(till Feb’24), with India’s exports at USD 84.69 million and Maldives’ exports at USD 0.7 million.
The trade between India and Maldives amounted to USD 548.97 million in FY 2023-24, with India’s exports at USD 543.83 million and Maldives’ exports at USD 5.4 million
Health: India is a preferred destination for Maldives citizens seeking health services, which boosts Indian healthcare sector and medical tourism.
Political
Political chaos: Uncertainty in the Maldives presents a potential environment for the rise of extremism and religious fundamentalism, as well as an increase in illegal activities such as smuggling and drug trafficking. Reports suggest that groups like the Islamic State (IS) and Lashkare-Taiba have also established footholds in the region.
Defense and Security Cooperation
Since 1988, defence and security has been a major area of cooperation between India and Maldives. India has adopted a very flexible and accommodating approach to meeting Maldivian requirements for defence training and equipment.Action Plan for Defence was also signed in 2016 to consolidate defence partnership. India provides the largest number of training opportunities for the Maldivian National Defence Force (MNDF), meeting around 70% of their defence training requirements — either on the islands or in India’s elite military academies.
India-Maldives defence cooperation also extends to the areas of Joint Exercises, Maritime Domain Awareness, gifting of hardware, infrastructure development, etc.
Key projects in the defence sector include the Composite Training Centre (CTC) for MNDF, the Coastal Radar System (CRS), and the construction of a new Ministry of Defence Headquarters
SAARC factor
SAARC holds particular significance for India as it encompasses all of India’s neighboring countries while excluding China. Recently, however, China has been making inroads into SAARC nations, diminishing India’s influence within the bloc. Examples include Pakistan’s China-Pakistan Economic Corridor (CPEC), Sri Lanka’s Hambantota port, and potentially the Maldives, which could be China’s next focus.