India resets ties with Maldives after row over China stance

New Delhi is set to introduce its payments system to boost tourism to the island nation

Indian Foreign Minister Subrahmanyam Jaishankar is the Maldives on an official visit. This is the minister’s first trip to the island nation since relations between the two countries soured earlier this year under the new Maldivian government led by President Mohamed Muizzu. 

Ties between New Delhi and the Maldives were strained after Muizzu ordered the removal of Indian troops stationed on the islands soon after taking charge of the country. The personnel, which had been operating surveillance aircraft in the Maldives, were withdrawn earlier this year and replaced with civilians. In March, the Maldives signed a military agreement with China.  

On Friday, Jaishankar said he was in the Maldives to “take stock of our defense and security engagement.” He also announced that India and the Maldives had signed an agreement to introduce India’s Unified Payments Interface in the archipelago nation. RuPay cards, India’s indigenous payment card system, which is akin to Visa and MasterCard, will be able to be used for transactions in Indian rupees in the Maldives, making it easier for tourists to make payments.  

The Maldives, known for its scenic beaches, is a popular destination for Indian tourists. However, Indians began boycotting the islands en masse this past January when ministers in Muizzu’s cabinet criticized Indian Prime Minister Narendra Modi for a post promoting India’s Lakshadweep islands as an alternate tourist destination. The ministers were suspended after New Delhi took exception to the comments.  

In the early days of the spat, Muizzu traveled to Beijing and suggested that the Maldives should boost tourism from China. However, in May, Maldivian Tourism Minister Ibrahim Faisal asked Indians to visit the islands, noting that the country’s economy is largely dependent on tourism.   

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On Saturday, Jaishankar also took part in a ceremony in the President’s office to commemorate completion of water supply and sewerage facilities on 28 Maldivian islands that were funded by a credit line from New Delhi.   

“Committed to deepen India-Maldives ties for the benefit of our people and the region,” the Indian foreign minister wrote on X (formerly Twitter). At the event, Muizzu termed India one of the “closest allies and invaluable partners” of the islands. In June, Muizzu was in the Indian capital discussing the expansion of “close and historic” ties between the two nations.  

Located to the south of India, the Maldives holds strategic importance and is seen as a key component of India’s ‘neighborhood first’ policy. Despite friction with Muizzu, India’s projects in the Maldives have gained speed over the last fiscal year, Reuters reported.  

The efforts include a $500 million project for roads and bridges around the Maldivian capital of Malé, and two airports worth nearly $130 million each on two of the archipelago’s islands. Both were supported by a line of credit from India. In May, New Delhi extended budgetary support to the Maldives government by rolling over a $50 million treasury bill for another year.