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Maldives has decided to launch India’s RuPay soon. While a date has not been formalised yet, a senior minister of the Mohamed Muizzu government has said that the move will bolster Maldivian Rufiyaa. The development comes amid strained bilateral ties between India and Maldives. However, the two countries have been attempting to mend the relations after the initial flareup in January 2024.
The ties between India and Maldives appear to be back on track. The Maldivian minister of Economic Development and trade Mohamed Saeed recently talked about introduction of India’s RuPay in his country. This came up while he was discussing how India and China have agreed to use local currency in bilateral trade, an Indian media agency reported.
Speaking to a local media agency of Maldives this week, Saeed said the upcoming launch of India’s RuPay Service is anticipated to further bolster the Maldivian Rufiyaa. RuPay is a global card payment network launched by the National Payments Corporation of India (NPCI). As per an Indian media agency, Saeed stated that the card will be used formally for Rupee denominated transactions within the Maldives.
A thaw in relations was visible when Maldivian Foreign minister Moosa Zameer visited India from May 8-10 2024, during his official trip, India announced the roll over of 50 million USD Treasury Bill for another year thorough the State Bank of India extending crucial budgetary support to the Maldives government.
Extending gratitude to EAM S Jaishankar, Zameer said on X, “I thank EAM Jaishankar and the Government of India (GOI) for extending the vital budgetary support to the Maldives with the rollover of US Treasury Bill (50 million USD). This is a true goodwill which signifies the longstanding friendship between India and Maldives. The Indian government’s decision came following the Maldivian minister’s request. EAM S Jaishankar said during Zameer’s visit that India Maldives Relations rely on mutual interests and sensible reciprocity.
“The World is today is passing through a volatile and uncertain period. In such times as we saw during COVID, natural disasters and economic difficulties, close partnerships with neighbours are of great value. It is in our common interests that we reach an understanding on how best we take our relationships forward,” Jaishankar said according to an Indian media agency. Commenting on his meeting with Jaishankar Zameer said, “We reflected on our long history of bilateral partnership shared by mutual respect and understanding.”
He was the first high-level official from Maldives to visit India since President Mohamed Muizzu came to power last year in November. In April, India permitted limited export of essential items like sugar, wheat, rice and onions to the Maldives.
This came despite India’s curbs on shipments of these food commodities to rein in domestic prices. The export of these commodities to the Maldives in the financial year 2024-25 that began on April 1, 2024, will be exempted from any existing or future restriction and prohibition on export, the Indian government said in a notification last month.
Amid growing tensions between New Delhi and Male, Muizzu said on January 13, 2024, after returning from his five-day visit to China, that the Maldives may be a small island nation but that doesn’t allow others to bully the country in an apparent reference to India. He also said that the island nation is not in anyone’s backyard. Ever since then, the Maldives President has toned down his approach.
Extending wishes on India’s 75th Republic Day on January 26, 2024, President Muizzu, who is widely seen as the pro-China leader recalled centuries old friendly relationships between the two nations built on mutual respect and deep sense of kinship. In his first interview after assuming chair in November, Muizzu had said in March that India will remain Maldives closest ally adding there was no question to it. In contrast to his earlier hardline stance, he said, “Everything can be achieved through discussions and deliberations. That is what I believe.”
A social media scuffle triggered a diplomatic row between India and the Maldives in January 2024. It all started in the month of January 2024 when three ministers of the Mohamed Muizzu government made derogatory remarks about India and PM Narendra Modi after he posted photos and videos of the Lakshadweep Islands on his social media account on January 6, 2024.
Their remarks created an uproar in India with social media users launching a boycott Maldives campaign. While Muizzu government jumped into to salvage the situation by sacking the accused three minsters. The Maldives tourism was hit due to the rift between the two countries as the number of Indians travelling to the country declined.
Underlining the historical ties between the two nations, the Maldivian tourism minster Ibrahim Faisal told a media agency that, “We have a history. Our newly elected government also wants to work with India. We always promote peace and friendly environment. Our people and government will give a warm welcome to Indian arrivals. As the tourism minister I want to tell Indians to please be part of Maldives tourism. Our Economy depends on tourism.
India is one of the biggest sources of tourism for the Indian Ocean Region (IOR) and nations whose economy relies heavily on the sector. Muizzu who rose to power on an India Out Campaign had vowed to remove a contingent of soldiers (Indian military personnel) from the island country. The presence of these troops emerged a big bone of contention between Muizzu regime and the Indian government. India withdrew all its soldiers from the island nation ahead of May 10 deadline set by president Muizzu.
India has always been a first responder to the Maldives in times of crisis. From development projects to financial assistance packages, the New Delhi has an important stake in the Island nation. As per a report from an Indian media agency, India earmarked Rs 400 crore of grants to the Maldives in the current fiscal year. This amounts to 1.5 percent of Maldives budget for the financial year 2024.
The trade between the two countries is also robust with India emerging as Maldives largest trading partner in 2023 on November 2022, New Delhi provided financial assistance of $100 million as budgetary support to help ease the financial challenges faced by the archipelago.
While the Maldives under President Muizzu has been moving away from India and shifting towards China, it cannot completely ditch its long-term partner New Delhi. Both countries need each other. However, Muizzu is still firm on decreasing the island nation’s dependence on New Delhi.
“Although President Muizzu is signalling a return to normalcy in Maldives’ bilateral equation with India, as compared to his campaign rhetoric, his larger goal of reducing his country’s reliance on India still stands,” Vinitha Revi, an Independent Scholar associated with the Observer Research Foundation, wrote in her piece.
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