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The visit of India’s External Affairs Minister Dr. S.Jaishankar to the Addu atoll in the Maldives in August this year and the development projects he inaugurated there, highlight the importance of that atoll for India’s defence in the Indian Ocean Region (IOR).
Maldives is an archipelago of 1192 islands stretching North-South in the central Indian Ocean. Its location is becoming increasingly critical for India’s defence as it faces a mounting challenge from China in the region.
Writing in the Indian website www.diconversations.com Maj Gen. (Rtd) Vivek Krishan Singh said that the “960 km-long submarine ridge below provides only two Sea Lanes of Communication (SLOC) for all sea traffic from the Gulf of Aden and Straits of Hormuz in the West to Malacca Straits in the East, and that too within the maritime borders of Maldives, which makes it a Toll Gate for these passages. Its central location between other island territories of Seychelles, Mauritius, Diego Garcia, Lakshadweep, and Sri Lanka further enhances its strategic value.”
Addu was home to a British air and naval base up to 1976. The atoll also provides an excellent port, whose facilities are now being improved, said Dr. David Brewster of the Australian National University in an article for the Lowy Institute.
On the threat from China in this part of the IOR, Gen. Singh said, “About a decade ago, India enjoyed an unchallenged sway in this region, as there was no clash of interest. However, expanding Chinese commercial and strategic interests changed the security dynamics. China acquired a Logistic Base in Djibouti.
“In Myanmar, China took control over Kyaukpyu port, a commercial maritime port that can be doubled as a military facility and set up a Naval intelligence unit at Coco Islands. Hambantota (Sri Lanka) and Feydhoo Finolhu (Maldives) were acquired as commercial bases on long lease. Gwadar (Pakistan) was pocketed as part of BRI.”
“Additional facilities on the African Eastern seaboard started appearing as China was in the process of acquiring and or constructing numerous dual use port facilities. With growing Chinese ambitions, aggressiveness, capabilities and reach, India was seriously challenged in the Indian Ocean”.
Chinese investment
“The Chinese investment in the Maldives is a subject of concern. First to be leased was Feydhoo Finolhu, a tiny islet just 0.5 square miles, strategically located just three nautical miles from the Maldivian capital and the international airport. The next was Kunaavashi, an atoll 35 nautical miles from Malé.”
“A Chinese military base in the Maldives would tilt the geopolitical balance towards China. The geographical location of Feydhoo Islands poses a direct threat to Indian security and freedom of movement in the Indian Ocean. If established, the Chinese military base would be 900 km away from Minicoy and 1000 km from the Indian mainland.”
“Such a military facility could be developed to dock warships and nuclear submarines amongst other maritime use. As of now, it is believed, that Beijing has taken over 17 islands in the Maldives as commercial projects. In case China does decide to convert one/them into a military base(s), the Maldives can do nothing to stop it.”
To this Dr. Brewster said, “For decades since the British departed, India has tried to secure access to Addu, or at the least to keep other potentially hostile powers out. In the late 1970s, New Delhi saw off attempts by the Soviets and even Iran to build military outposts there. Growing major power competition in the Indian Ocean makes that imperative even stronger today.”
New Delhi is nor working to entrench itself as the Maldives’ key security partner, providing training to the Maldives defence force, giving an aircraft and helicopters and, most recently, helping to build a major new Coast Guard facility near Male. The Maldives has been made a participant in the Colombo Security Dialogue.
India’s effort to cultivate the Maldives suffered a setback during the rule of the pro-China Abdulla Yameen (2013-2018) and for the initial months of the rule of the current President Mohamed Muizzu.
The “India-Out” campaign, the controversy over the Indian military-operated medical evacuation service, Maldivian junior ministers’ insulting comments on Indian Prime Minister Modi and Muizzu’s setting up a parliamentary panel to re-examine all agreements with India, put the clock back from India.
India reacted by launching an unofficial “Boycott Maldives” campaign by Indian tourists who were subtly motivated by Prime Minister Modi to go to the Lakshadweep islands in Indian waters instead.
The Indian boycott pinched the Maldivian tourist industry to the tune of US$ 158 million. This hurt as tourism is the mainstay of the Maldivian economy.
Economic crisis
Maldives began to suffer from an acute foreign exchange shortage and debt servicing problems for a variety of global and domestic policies. The World Bank said that as of 2023, Maldives’ total public debt stood at US$ 8 billion or 122.9 percent of the GDP. The foreign debt component was US$ 3.4 billion – the bulk of it owed to China and India. The Maldives’ debt to China alone is US 1.3 billion.
To avoid a default, the Maldives needed to pay US$ 114 million in 2024, US$ 557 million in 2025 and US$ 1.07 billion in 2026. This was a tall order when the gross foreign currency reserves in August, were only US$ 437 million, enough only for 1.5 months of imports.
In August, Fitch Rating reported the Government’s inability to repay a US$ 500 million Sukuk due in 2026. Sukuk is an Islamic Shariah-compliant debt instrument. No Government had defaulted on Sukuk in the past. On September 11, Moody’s downgraded the Maldives saying that “default risks have risen materially.”
Given the grim outlook, President Muizzu came down from the high horse, to mend fences with India. The fact that Beijing did not rush to help its ally in Male pull the chestnuts out of the fire, opened the doors to New Delhi again.
Muizzu negotiated a face-saving settlement on the Indian military personnel. Male and New Delhi agreed to continue with the Indian medical evacuation mission but with the military personnel replaced by civilians. New Delhi took its military personnel back by March 2024. Muizzu also prevailed upon his parliamentary committee investigating past agreements with India to suspend its proceedings.
Jaishankar visited the Maldives in August to inaugurate several key projects. These included water and sewerage networks on 28 islands, financed through an US$ 800-million Indian Line of Credit. Several community development projects were supported by the Indian grant aid. A Unified Payments Interface (UPI) deal was meant to help promote Indian tourist inflow.
Muizzu will be visiting India officially soon to seek a U$ 400 million currency swap arrangement. The swap deal would effectively be an Indian bailout to help the Maldives make impending interest payments. The Maldivian Foreign Ministry praised India’s support following the extension of a US$ 50 million Treasury bill (T-bill) by one year. This extension is the second rollover granted this year, with a similar extension provided in May 2024.
Talks have resumed to establish an Indian Consulate in Addu City as planned earlier in Solih’s time but abandoned after Muizu took over. According to Adhadhu News, India is ready to reciprocate by allowing an additional Maldivian Consulate in India. Currently, there is a Maldivian Consulate in Thiruvananthapuram in addition to a High Commission in New Delhi.
Investments in Addu
Jaishankar has said that India has invested around US$ 220 million in Addu. India has partnered with the Maldives on the Addu Reclamation and Shore Protection Project to find a sustainable way to develop Addu as a regional hub.
The reclamation of 184 hectares of land was concluded earlier this year. This ambitious program of US$ 80 million involves reclamation for tourism development purposes as well as for the overall economic development of Addu.
Another important project is the redevelopment of the Addu roads and Drainage Development with an outlay of US$ 70 million. India constructed the Addu Detour link road.
With Indian funding, the Maldives is redeveloping the Gan International Airport, a connectivity project with an outlay of US$ 29 million that will bridge the gap between Addu atoll and the Maldives and the rest of the world. It will boost tourism in Gan and southern atolls. Besides there are 65 projects in the Maldives, of which 12 are in Addu. Five of these projects have already been delivered
Do’s for India
But on the security front, India still has a long way to go vis-à-vis China, said Gen. Singh. According to him India’s defence outlay has been steadily reducing and stands at a low percentage of GDP.
The Indian Naval fleet of ships and submarines needs to cross the 200 mark earliest. Given that the number of ships being commissioned is less than those de-commissioned, it seems unlikely that India would be able to meet that target.
He said that the QUAD should ensure that the Chinese Navy remains embroiled in the Pacific while we develop the requisite capability.
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