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How will Maldives' tourism, economy be affected if India decides to pull the plug? | Explained

India dominated the number of tourist arrivals in the Maldives during the year 2023, followed by Russia and China. The recent row over remarks against PM Modi threatens to derail a once-thriving relationship between India and the Maldives.

Written By: Aveek Banerjee @AveekABanerjee New Delhi Published on: January 08, 2024 13:27 IST
PM modi, lakshadweep, India Maldives row
Image Source : NARENDRA MODI/X The controversy erupted after PM Modi visited Lakshadweep recently.

Relations between India and the Maldives are at risk of being strained again, after ministers in Male used derogatory language towards Prime Minister Narendra Modi following the latter's visit to Lakshadweep. While political rifts appeared when Maldives President Mohamed Muizzu, widely considered a pro-China leader, was appointed in November, the island country is also expected to suffer a serious setback in its tourism sector due to boycott calls from Indians.

The controversial remarks set off a major row on social media platforms, as thousands of Indians cancelled their bookings and flight tickets to Maldives. High-profile celebrities like Akshay Kumar also took to social media to condemn the remarks made against PM Modi. EaseMyTrip co-founder and CEO Nishant Patti also announced the suspension of all Maldives flight bookings.

The hashtag #BoycottMaldives gained traction on social media as Indian tourists started cancelling their scheduled vacations to the island nation. Will these boycotts impact the Maldives? All signs lead to a resounding yes, as the country is dependent on India for a lot of things, particularly tourism.

Remarks against PM Modi: The story so far

The diplomatic uproar started when some Maldives ministers used derogatory and disrespectful language against the Indian PM. Mariyam Shiuna, Deputy Minister of Youth Empowerment, Information and Arts, while commenting on the photos of PM Modi, dubbed him as a ‘clown’ and a ‘puppet of Israel’. Some ministers even commented that Indian beaches could not meet the cleanliness levels of Maldives tourist places.

“The move is great. However, the idea of competing with us is delusional. How can they provide the service we offer? How can they be so clean? The permanent smell in the rooms will be the biggest downfall," Zahid Rameez, a Council member of the ruling Progressive Party of Maldives (PPM) wrote on X. 

The Indian High Commission in Maldives had strongly raised and expressed concerns about the remarks made in regard to PM Modi by the ministers in the Maldives Government, according to government sources. The Muizzu administration distanced itself from the remarks and suspended three ministers on Sunday, as per reports.

Several high-ranking politicians in the Maldives, including ex-presidents Ibrahim Mohamed Solih and Mohamed Nasheed, condemned the remarks. Maldives Foreign Minister Moosa Zameer expressed that such remarks against foreign leaders are deemed "unacceptable" and do not represent the official stance of the Maldives government.

Maldivian Envoy Ibrahim Shaheeb was summoned by the Ministry of External Affairs on Monday morning. He was seen entering and later exiting Delhi's South Block. On the other hand, the Indian High Commissioner to Maldives, Munu Mahawar, was called in at the Maldives Foreign Ministry.

It is important to mention that relations between the two countries strained after Muizzu came to power in November, when he called for the expulsion of Indian security personnel, ordered the review of over 100 agreements with India, and dropped a joint hydrographic survey agreement.

India's contribution to Maldives tourism

After the row, former Maldives Minister Ahmed Mahloof said on X that if Indians started to boycott the country, it would have a huge impact on the country's economy. "I'm deeply worried about the escalating situation regarding the sensitive comments about our closest neighbour. Indians boycotting the Maldives would have a huge impact on our economy. It would be hard for us to recover from such a campaign. I call on the government to swiftly take serious action to solve the issue ASAP," Mahloof wrote.

That is actually a real concern for the Maldives. Data from the Maldives Tourism Ministry shows that the highest number of tourists there come from India. Out of the 17, 57,939 tourists in 2023, India led the number of tourists with 2,09,198 arrivals, followed closely by Russia  (2,09,146) and China (1,87,118). In November 2023, India accounted for 20 per cent of total arrivals

Aviation data shows that Maldives remained a popular choice for Indians as a tourism destination for several years. The tourism sector is very crucial for the Maldivian economy, which contributes to one-third of the GDP. Tourism also contributes to 70% of employment in the Maldives.

The remarks towards India and PM Modi are uncalled for, given the fact that the Prime Minister's visit to Lakshadweep had no mention of the Maldives. In this regard, if the boycotts come into effect, the move would deal a tremendous blow to Maldives's sprawling tourism sector and the economy itself.

Other areas of cooperation

Maldives is also dependent on India in other areas as well. India's relations with the Maldives go back much earlier than China's, which is considered a fairly recent player. India's assistance and platforms have contributed significantly to public welfare, humanitarian assistance, disaster relief, and in combating illegal maritime activities in the island nation.

India also signed a comprehensive Action Plan for Defence in 2016 for deploying defence equipment, improving defence infrastructure and training Maldivian security forces. India also provided $100 billion as financial assistance to the island nation to help with a difficult financial situation and the delivery of vaccines during the COVID-19 pandemic also cemented India's place as a first responder.

India provided a massive grant of $400 million to Maldives' National College of Policing and Law Enforcement (NCPLE) in Addu City, which was inaugurated by External Affairs Minister S Jaishankar. India has embarked on a crucial Greater Malé Connectivity Project, which seeks to connect the capital to nearby islands.

India has also constructed numerous parks, hospitals, community centres, and schools for civilians in the archipelago while providing aircraft, choppers, sea ambulances, a landing craft assault ship, and interceptor boats. Maldives is also one of the largest importers of rice, fruits, vegetables, poultry products, spices, pharmaceuticals as well as engineering and industrial commodities in India.

India became Maldives' third largest trading partner in 2021 and has recorded a speedy uptick since then. Exports from India to the Maldives reached Rs 41.02 crore in 2023. These figures can possibly decline in light of the new developments, which can further negatively affect the Maldivian economy.

There are 26,000 Indians living in the Maldives, which means that they contribute significantly to the economy. India and the Maldives also deepened cooperation when New Delhi helped develop a harbour on the Uthuru Thilafalhu (UTF) atoll for the Maldivian Coast Guard. 

India has maintained that Maldives remains a steadfast partner in the fight against terrorism and maritime security. The fight for influence in the IOR stems from the change in foreign policies of many countries to counter Chinese influence in the Indo-Pacific region. Leaning too much on China would also not be in favour of Maldives with the changing security situation in the IOR and the rising strength of the Quadrilateral Security Dialogue (Quad).

India is geopolitically closer in proximity to the island nation and given its past of being a first responder and provider of defence and essential supplies, the diplomatic community is likely to side against him should he adopt a strong anti-India stance. Analysts have argued that Muizzu might be forced to tone down his rhetoric.

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