India and Maldives Relations

India was one of the first countries to establish diplomatic relations with the Maldives after it gained independence in 1965 and the two settled their maritime border in 1976. India and Maldives share a friendly and close relationship. Today, both nations are members of the South Asian Association for Regional Cooperation (SAARC) and signatories to the South Asian Free Trade Agreement (SAFTA). During the first few decades of independence, the bilateral partnership was limited, although the two did sign a comprehensive trade agreement in 1981. However, bilateral relations took their first major step forward following India’s intervention to crush a coup against the Maldivian government in 1988. The Indian armed services quickly restored order in the archipelago and the Indo- Maldivian relationship reached a new high. During the last decade, as India’s interests have expanded further into the Indian Ocean, the geo-strategic importance of the Maldives to India has increased commensurately. Not only has New Delhi remained dedicated to its assistance in the Maldives during bilateral disputes, but it has also evinced a pattern of escalating support. In the past, India’s developmental assistance to the Maldives has been driven by three key priorities; maintenance of cultural and historical relations, trade and economic access, and finally, security interests, including the safeguarding of critical sea lines of communication. As India has increased its development cooperation with the Maldives, it has also strengthened security arrangements, demonstrating growing geostrategic ambitions in the Indian Ocean waters. These changes highlight the complexity of the bilateral relationship as New Delhi recognizes the strategic importance of the island chain while in turn the Maldives realizes its own leverage. Early bilateral development cooperation focused on health infrastructure. In 1986, India agreed to establish and finance entirely a medical complex in the capital of Male.  At present, the hospital provides the most sophisticated tertiary care in the Maldives. India continues to support the institution, and in November 2011, India financed a major renovation of the hospital at a cost of 372.4 million rupees. In 1996, India established in Male the Faculty of Engineering Technology, an institute of technical education. At present, India is also establishing the India-Maldives Friendship Faculty of Hospitality and Tourism Studies as well as a police academy in Male. These projects fall comfortably in line with India’s history of building long-term educational and health infrastructure in the Maldives. Disaster relief and management has been a second key part of Indian assistance to the Maldives. Following the tsunami that hit in December 2004, India was the first country to provide relief. Within 24 hours of the wave’s impact, the Indian Coast Guard and Air Force arrived with relief materials.

During a visit of the newly elected President Nasheed to India in December 2008, India extended a Standby Credit Facility (SCF) of US$ 100 million to the Maldives. Following this, in December 2010, the Export Import Bank of India announced its first Line of Credit (LOC) to the Maldives worth US$ 40 million for the construction of 500 housing units. The LOC has a two percent concessional interest rate with a repayment period of 20 years, putting it in the same interest rate category as loans provided to low income countries by the International Development Association of the World Bank. Although India and the Maldives signed a trade agreement in 1981, bilateral trade is not commensurate with its potential. However, since the early 2000s, Indian exports to the Maldives have been growing exponentially. India remains the Maldives’ third largest trading partner. India imports primarily scrap metals, while Indian exports to the Maldives consist of agricultural and poultry produce, textiles, pharmaceuticals, and a variety of engineering and industrial products. While China has now broken into the top ten in terms of trade volume with the Maldives, it has only risen one place in the ranking since 2007. India’s current exports to Maldives are four times as large as Chinese exports to the Maldives, leaving India with a sizable advantage in influence over the small island state.

Since the early 2000s, major increases in development cooperation have correlated closely with new security agreements. These agreements cover every sector of security, from environmental protection to terrorism. However, while some arrangements on climate change and disaster relief have been signed, Indian defense cooperation has primarily focused on strengthening traditional security agreements. This increase in development cooperation policy, beginning in the early 2000s, but accelerating in 2006-2007, follows increased Chinese presence in the region. While the immediate reason for enhanced defense cooperation is to build military assets in the Maldives to guard against terrorists and pirates, observers also view India's military positioning in the Indian Ocean island nation as a furtherance of its longer-term military deterrence against China. In 2006, rumors reached New Delhi that the Maldives was considering leasing an island to Beijing for a naval base. In response, India signaled that it would continue providing the island’s security, offering Male a state-of-the-art 260-ton fast-attack craft to aid in guarding coastal waters. New Delhi did not waste time in taking initiatives to strengthen defense cooperation with the newly elected democratic government either, positioning two helicopters for better surveillance, setting up new radar systems on all 26 atolls, and training the Maldivian security forces to operate the new equipment. Further, the Maldives being a Muslim country, India is wary about the influence that Pakistan may exert, including the possibility of infiltration by terror cells to launch attacks in India, as has happened in Bangladesh. New Delhi has thus been looking to set up an intelligence base in Male. India is concerned over bases being set up by China in its neighborhood, which have been described as a "string of pearls'' around India's neck that could easily be tightened should the need arise. The geostrategic importance of the nearly 1,200 islands of the Maldives as a “most important interstate,”  underlines the importance for New Delhi of positive bilateral relations with Male.

Success in the Indian Ocean, and consequently the 21st century global economy, will center on increased access to global resources. This access will principally be a response to the strength of bilateral relationships. India’s development cooperation adds a dynamic quality to the strength of the relationship by emphasizing cultural heritage, developing economic engagement, and integrating cooperative security networks. As these imperatives drive India’s development cooperation, New Delhi will do well to maintain its engagement with Male while looking to accommodate the growing interests of states that will lay in the wake of the Indian Navy.