‘We Always Knew India Is…': Maldives' U-Turn On India After Modi-Muizzu Ink Big Deal
/ Jul 25, 2025, 07:37PM IST
From leading the fiery 'India Out' campaign to calling India a 'trusted friend,' Maldivian President Mohamed Muizzu's stunning U-turn has shocked many. Standing beside Prime Minister Narendra Modi in Malé, Muizzu praised India's role in regional development after both leaders signed a major bilateral deal. The dramatic reversal—from branding India a bully to recognising its leadership—marks a new chapter in Maldives-India relations, underscoring the power of diplomacy, strategic interests, and shifting geopolitical realities in the Indian Ocean.
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Indian Express
16 minutes ago
- Indian Express
PM Modi's engagement with the Maldives shows India is playing the long game
Written by Aditya Gowdara Shivamurthy Prime Minister Narendra Modi was on a state visit to the Maldives from July 25 to 26. The visit comes against the backdrop of the President of the Maldives, Mohamed Muizzu, pushing for a recalibration with India. Driven by economic necessities, India's pragmatic outreach, and China's underwhelming support, he has moderated his 'India Out' policy and rhetoric and toned down his unconditional allegiance to China. Given the backdrop, the visit is a strong symbolic message of Delhi's persistent influence in the country. Besides, it has also laid the ground for New Delhi's long game in the Maldives. By pushing for economic and financial connectivity, especially with the Indian Rupee, and doubling down on political engagement, India is creating new leverage. During PM Modi's visit, both leaders reviewed the entire gamut of relations and agreed to strengthen the multifaceted relationship by implementing the Joint Vision Document. They also inaugurated several India-funded projects, including roads and drainage in Addu city, the Ministry of Defence building, and six High Impact Community Development Projects. India also handed over 72 vehicles for the Maldives National Defence Force, 2 BHISHM Health Cube sets, and 3,300 housing flats. Additionally, they signed four MoUs to further cooperation in pharmacopoeia, meteorology, fisheries, and digitalisation. Most importantly, both countries have signed four agreements on financial and economic connectivity, as the Maldives faces debt distress and declining foreign reserves. As of March 2025, the Maldives has a debt of $9.4 billion, of which nearly 60 per cent is in US Dollars. However, the government continues to struggle with low foreign reserves. Currently, it has a reserve of a mere $850 million, and this year alone, the government will have to service over $600 million, along with maintaining its imports. Next year, it will have to service over $1 billion. Maturing debts, specifically bonds (domestic and external) and Chinese loans, have continued to deplete foreign reserves. China's loans have declined from $613 million in 2021 to $473 million in 2025, and its sovereign guarantees have reduced to $567 million. This has left India as the largest bilateral creditor to the country, especially with loans, currency swaps, and credit lines (LOC) taken under the previous government now maturing. Debts from EXIM India have increased from $15 million in 2021 to $572 million, and the sovereign guarantee is at $608 million. To complicate matters, more than $800 million of Indian loans committed are yet to be disbursed. With a looming economic crisis and increasing Indian debts, India and the Maldives signed an amendatory agreement to close the previous LOC. This will be replaced by a Rupee-denominated LOC worth Rs 4,850 crore (equivalent to $565 million), reducing the Maldives' debt obligations by 40 per cent, from servicing $51 million to $29 million annually, and easing the pressure of depleting US Dollar reserves and overall debts. Another major agreement was the implementation agreement on Unified Payment Interface (UPI). This, together with the RuPay card introduced in October 2024, will boost direct transactions between countries. These developments build on the finalisation of the local currency settlement system. Henceforth, India and the Maldives can now trade and allow tourists, diaspora, and businesses to make cross-border payments in local currencies (Rupees and Rufiyaa) rather than in US Dollars. Both countries also finalised the terms of reference for the India-Maldives Free Trade Agreement (FTA) and formally commenced negotiations on the agreement. With the FTA reducing trade barriers and boosting trade, Indian commodities will become cheaper in the Maldives. India is one of the Maldives' largest trade partners. While their trade is worth $680 million, India exports goods worth $561 million. Earlier, the Maldives would have imported goods from India using US Dollars; they can now do the same with the Indian Rupee, which the Maldives can tap from the currency swap, credit line, and direct transactions. This will help ease pressure on the economy and reduce the outflow of the US Dollar. The FTA will also likely be complemented with a bilateral investment treaty, creating new economic leverage for India. Learning lessons from the past, India also doubled down on its engagements across party lines. During his visit, PM Modi met prominent figures from the ruling party, including those who played a crucial role in the 'India Out' campaign and are close to China. These engagements also included bilateral meetings with the President, the Vice President, and the Speaker of the parliament. Modi also held a meeting with prominent figures from the Jumhooree Party, Maldives National Party, and Maldives Development Alliance. Separate meetings were held with the main Opposition, the Maldivian Democratic Party, and former President Mohamed Nasheed. These engagements underline India's attempts at making relations non-partisan and resilient to turbulent domestic politics. PM Modi's latest visit to the Maldives shows that India is letting bygones be bygones, and is more optimistic about the future. There is confidence that the Maldives will understand that regional security is an issue of mutual interest. However, there are some problems. For India, the Maldives' economic stability remains a major challenge. On its part, Malé will continue to engage with Beijing to seek assistance and investments in order to diversify and not become over-reliant on India. Discussions of loan restructuring with China began in January 2024 and have shown little progress, further nudging Muizzu to engage with the country. India, therefore, should not let its guard down. The writer is an associate fellow with the Strategic Studies Programme's Neighbourhood Studies Initiative
The Hindu
16 minutes ago
- The Hindu
Sonia, Kharge, Rahul, Akhilesh join Opposition leaders in protest against SIR
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Fibre2Fashion
19 minutes ago
- Fibre2Fashion
Indian industry leaders weigh in on CETA with UK
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The trade talks, which spanned over three years with intermittent progress, reached a conclusion in May. Negotiators on both sides accelerated efforts to finalise the deal against the backdrop of global tariff disruptions set in motion by the Trump administration. Bringing together two of the world's top economies —ranked sixth and fifth globally—the deal sets an ambitious goal of increasing bilateral trade by $34 billion by 2040. For the United Kingdom, this is its most substantial trade pact since its departure from the European Union in 2020. For India, it marks a major strategic breakthrough, establishing a comprehensive economic partnership with an advanced economy and potentially laying the groundwork for similar agreements with the European Union and other global partners. According to the agreement, 99 per cent of Indian exports to the UK— encompassing over 1,143 crucial textile and clothing items, as per reports—will now enjoy zero-duty access, providing Indian exporters with a stronger foothold in the British market. Reacting on the development. Sudhir Sekhri, Chairman AEPC , said, 'The signing of the landmark India-UK bilateral trade agreement, marks a significant milestone in strengthening the strategic and economic ties between the two nations. This deal will usher a new era of garment trade with the UK. This agreement will enhance market access, spur investment and job creation in the garment sector, besides creating new opportunities for businesses and consumers on both sides.' He further added: 'The India-UK CETA will not only give competitive market access to the Indian apparel products in the UK market but also increase the trust and reliability factor by streamlining customs procedures and mutual recognition of standards, thereby, reducing the compliance burdens for the Indian apparel exporters. With duty-free access, the apparel exports to the UK will witness a renewed thrust and moment in the coming years.' Dr. A. Sakthivel, Honorary Chairman of Tiruppur Exporters' Association (TEA) and Vice Chairman of AEPC , hailed the signing of the agreement and commended both the Prime Minister and the Ministry of Commerce & Industry for what he called a transformative deal for India's textile and apparel industry. He maintained: 'This agreement paves the way for a historic leap forward for our industry,' adding, 'It resonates strongly with our national vision to place India among the top three global economies.' Dr. Sakthivel further shared with Fibre2Fashion the deal's benefits for regional textile hubs, citing improved access for key manufacturing centres including Tiruppur, Surat, Ludhiana, Pune, Chennai, West Bengal, and Assam. He also pointed out that Indian exporters are now in a much stronger position to compete with counterparts from Bangladesh, Vietnam, and China in the UK's textile and apparel market. Reflecting on the potential boost to India's readymade garment (RMG) sector, Dr. Sakthivel said: 'We anticipate that exports of RMG to the UK will more than double—from $1.45 billion to approximately $3.25 billion. Within this, knitwear alone is expected to grow from $0.8 billion to around $2 billion, accounting for nearly 70 per cent of total RMG exports to the UK.' Speaking to Fibre2Fashion, N Thirukkumaran, chairman of Esstee Exports and General Secretary of TEA said India's apparel exports is expected to double in the next 2-3 years, thanks to the India-UK CETA. He also noted that this agreement could serve as a model for future successful FTAs, including with the European Union. Thirukkumaran further emphasised the positive impact of the India-UK CETA on job creation in the textile sector, which remains the second-largest source of employment in India after agriculture. Meanwhile, interacting with Fibre2Fashion, Rahul Mehta, the chief mentor of the Clothing Manufacturers Association of India (CMAI) underlined that 'the India-UK CETA is obviously going to have huge impact on textiles and apparel exports from India, with prices being reduced by close to 10 per cent.' 'While I may not share the euphoria of some of my peers, I do see our apparel exports rising from the current $1.3 billion to probably around $2.0 to $2.2 billion over the next few years,' said Mehta. 'That said, we must remember the zero-duty regime will likely take at least a year, if not longer, to come into effect. Plus, UK buyers have stringent compliance and sustainability requirements. Indian exporters will need to significantly upgrade their operations to meet these growing expectations—particularly around sustainability,' he added. Though not overly concerned about the potential impact of the FTA on India's domestic market, the CMAI chief mentor nevertheless expressed surprise that this issue has largely gone unnoticed in media discussions. 'It is zero per cent on both sides, remember!' Mehta concluded with a note of caution. Fibre2Fashion News Desk (DR)
