Bilateral trade with Maldives presently low but immense opportunities exist
Bilateral trade between India and Maldives is not much at present, standing at a mere USD 222.68 million with a surplus in favour of India. This rather modest trade does not bespeak of the good India-Maldives relations that exist, characterized by close friendship, understanding and cooperation. An enormous opportunity exist for enhancing cooperation in the fields of hospitality, tourism, real estate, water treatment, medical tourism, airlines, etc. and Maldivian President Mr. Ibrahim Mohamed Solih’s visit to India recently was an important step in that direction.
This visit of Mr. Ibrahim Mohamed Solih was of strategic importance as it was his first overseas visit after taking over as the President of the Maldives. It has only been about three months since he ousted the former President Yameen, who had ruled Maldives in a heavy-handed manner for several years. When Mr. Ibrahim Mohamed Solih had won the elections convincingly, TPCI’s Publicity Division which brings out this TPCI Newsletter had written in an article titled “Maldives Election Results: What it means for India as new dawn emerges on Maldivian archipelago” (published on October 1, 2018) that “Winds blowing from across the mighty Indian Ocean have brought a great change in the Maldivian archipelago. A new dawn has emerged in this tropical nation comprising of palm-fringed islands, merely 523 km southwest of India’s southern tip. The win of opposition candidate Ibrahim Mohamed Solih in the Presidential election in the Maldives is being seen as a new era of democratic revival that could push the island country closer to India. The Presidential elections were to elect the Head of Government in Maldives but they have been so consequential and of such strategic importance that some analysts are already seeing it as India’s diplomatic win over China.” That Mr. Ibrahim Mohamed Solih chose India for his first overseas visit is a justification of our statement and is an indicator of better days ahead where India and Maldives will surge ahead in enhancing their relations further; laying their foundations on sound business footing.
We had prophesied about the turn India and Maldives relations was likely to take upon Mr. Solih winning the election, when we had written: “After two years of tetchy relations between India and the Maldives, the recently concluded elections could open new chapter in bilateral ties. But it is easier said than done. Despite Solih’s promise to “reassess” Chinese projects, his hands are to be tied due to the huge debt trap that Maldives has fallen into, under five years of Yameen’s rule. Presently, 70 per cent of Maldives’ external debt is to China. China has got deeply entrenched in Maldives during the last five years and it can easily take unseating of Yameen in its stride.
Though Solih would definitely attempt to restore normalcy in India’s age-old ties with Maldives, he cannot wane away China easily considering the massive debt that his country owes to China, due to which it has to pay $92 million a year in repayments to China, roughly 10 per cent of Maldives entire budget.
It is not possible for India to indulge in cheque-book diplomacy which China practices that has enabled it to create debt-traps for countries with weak economies. China will surely try to put both sticks and carrots in Solih’s way to prevent Maldives from veering back into India’s sphere of influence.
It is likely that this ongoing head-to-head fight for gaining influence in Maldives is sure to spill out of the confines of this tiny archipelago and become a major factor in the great power game.
A choice for India is that it could take help of the US’s planned setting up of a $60 billion agency to counter China in developing world and use this to assist the new government in infrastructure development and meeting its foreign debt obligations, including by extending low-interest credits to pay off Chinese loans. Maldives’ autonomy from debt entrapment will be vital for India’s neighbouring country to take independent decisions.”
Mr. Solih, during his visit to India, termed India as Maldives’ closest friend and invited the Indian businessmen to invest in his country. In a meeting organized by India-Maldives Business Forum on behalf of the Economic Diplomacy Division of Ministry of External Affairs, Govt. of India, Mr. Solih said his country was working on various infrastructure projects and assured Indian business leaders that there are no obstacles in investing in the island nation.
“India is not only our closest friend it is also our largest trading partner. The economic success India has achieved after liberalizing its economy is worthy of the highest praise,” Mr. Solih said. Terming the Maldives as a fast-growing emerging economy, he added the country continues to develop its tourism industry.
Mr. Solih added the country is fully committed to providing “protection and legal cover” that overseas investors need to grow their business.”In short, the Maldives is really able and open for business,” he said.
Speaking on the occasion, Mr. Suresh Prabhu, Union Minister for Commerce & Industry said India and the Madives could work together in various sectors like the fisheries, agri-products and services. He added that he would also like to send a delegation of high-level officers from his ministry to figure out various areas of cooperation between the two countries. The Minister also talked of the need to increase number of flights to Maldives.
Significantly, TPCI had sent a group of chief executives belonging to travel trade industry to the India-Maldives Business Forum meeting, who are looking at enhancing travel and tourism to Maldives. As mentioned earlier, enormous opportunity exist for enhancing cooperation in the fields of hospitality, tourism, real estate, water treatment, medical tourism, airlines, and related segments.