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Five pacts inked, agreement on FTA negotiations: India steps up economic aid to Maldives after talks to reset ties
Muizzu arrived in New Delhi on Sunday 6 Oct evening for a five-day visit, during which he was ceremonially welcomed at Rashtrapati Bhawan by President Droupadi Murmu and received a tri-services guard of honor. (@MEAIndia/X)
Dr.G.R.Balakrishnan Oct 08 2024 Exim & Trade News

Five pacts inked, agreement on FTA negotiations: India steps up economic aid to Maldives after talks to reset ties

Moving to stem the slide in ties ever since President Mohamed Muizzu came to power on an anti-India election plank last year, India and Maldives Monday agreed to transform the bilateral relationship to a “Comprehensive Economic and Maritime Security Partnership”.

As Prime Minister Narendra Modi met President Muizzu in New Delhi, India decided to extend support in the form of INR 30 billion and USD 400 million as part of a bilateral currency swap agreement, instrumental in tackling the ongoing financial challenges faced by the Maldives.

The two sides agreed to launch negotiations for a Free Trade Agreement and signed five pacts including the currency swap agreement, training of judicial officers, prevention of corruption, law enforcement training, sports and youth affairs.

The two leaders also launched the Rupay card in the Maldives, while India handed over 700 social housing units and inaugurated a new runway at the Hanimaadhoo international airport. After their bilateral talks, Muizzu said, “Maldives will remain a friend committed to our shared vision of peace and development in our countries and our region.” He invited Modi to visit the Maldives next year to celebrate the 60th anniversary of diplomatic ties.

Modi described India as the “first responder” for Maldives in times of crisis – from Covid pandemic to drinking water shortage. Calling the ties as “age-old”, he said the Maldives is India’s “close neighbour” and “friendly country”. As part of India’s “neighbourhood first policy” and the “SAGAR (Security and Growth for All in the Region)” vision, he said India has fulfilled its responsibilities as a neighbour.

On the economic help for Maldives, Muizzu said, “I would like to thank Prime Minister Modi, the government and people of India for the generous assistance and cooperation extended to the Maldives over the years, including the recent budgetary support in the form of rollover of the T (treasury) bills. I am thankful for the India government’s decision to provide support in the form of 30 billion Indian rupees, in addition to the 400 million US dollar bilateral currency swap agreement, which will be instrumental in addressing the foreign exchange issues we are facing right now. Our discussions today underscored a shared commitment to remain engaged on further measures that will bolster the Maldives’ economic resilience and stability.”

On the FTA, Muizzu said, “We look forward to concluding the free trade agreement with India, which will enable us to harness the full economic potential between our countries and to increase Indian investments in both our tourism and various sectors of development.” The economic assistance is significant since Maldives is looking at a debt default as its foreign exchange reserves have dropped to $440m (£334m), just enough for one-and-a-half months of imports.

On Monday, the joint statement titled “India and Maldives: A Vision for Comprehensive Economic and Maritime Security Partnership”, said India and Maldives share “common challenges in the Indian Ocean Region which have multi-dimensional implications for the security and development of both the countries. As natural partners, they resolve to work together in advancing maritime and security cooperation for the benefit of peoples of both India and Maldives as well as for the larger Indian Ocean Region.”