Indian industry imposes boycott on Maldives in January 2024.
Context
In January 2024 Indian industry group Confederation of All India Traders (CAIT) called on Indian firms to avoid trade with the Maldives. In a statement, the CAIT said that it “urged traders and exporters to refrain from conducting business dealings with the Maldives” with CAIT leader Praveen Khandelwal further saying that this mechanism “encourages traders to stand united in sending a strong message against such behaviour by temporarily abstaining from trade engagements with the Maldives”. Additionally, a major Indian travel platform named ‘EaseMyTrip’ (which has a 22% market share in India) blocked flight bookings to Maldives. The Executive Director of EaseMyTrip told press that flight bookings to the Maldives would be halted “indefinitely”, adding that “[w]e decided to take this step because any self-respecting nation should do this. The statements which we heard from the representatives of the Maldives government were extremely derogatory to the country”.
The broader context for these mechanisms is the election of the Maldives’ President Mohamed Muizzu, in November 2023, after an election campaign in which Muizzu had used the “India out” slogan to demand that Indian military personnel based on the island leave. After his election, President-elect Muizzu chose to visit Beijing first, instead of New Delhi – which has been reported as a symbol of his alleged pro-China leanings. The immediate trigger for India’s measures came after Indian Prime Minister Narendra Modi visited the Indian island of Lakshadweep (supposedly a rival destination to the Maldives) in January 2024 to promote domestic tourism. Three deputy ministers in the Maldives government responded to Prime Minister Modi’s visit by calling him a “clown” a “puppet of Israel” and a “terrorist” (respectively) on social media, leading to outrage in India.
Impact
According to reporting, one third of the Maldives’ economy consists of tourism, with India the largest sources of tourists – 209,198 visitors in 2023. Reporting has suggested that the Maldives’ economy could face damage in the range of US$1.8 billion to US$2 billion as a result of these mechanisms (by comparison, the Maldives’ entire GDP is estimated at just over US$5 billion). However reporters have also noted that Indian airlines and tourism operators have also been negatively impacted, suffering financial losses. They also expressed scepticism that such pressure by India would be effective – “Coercive diplomacy by threatening its tourism economy will not win the love of the Maldivians however dependent they are on India.”
Responses
i) Maldives government and industry responses.
The Maldives’ foreign ministry responded to India’s outrage by acknowledging the “derogatory remarks” against Prime Minister Modi, and the Maldives’ government subsequently suspended the three deputy ministers at the Ministry of Youth Empowerment, Information and Arts: Malsha Shareef, Mariyam Shiuna and Abdulla Mahzoom Majid – who had triggered Indian outrage with their social media posts.
(ii) Indian government and industry responses
Indian celebrities including actors and a former cricket player, responded by promoting India’s domestic tourism industry. In April 2024, India permitted exports of essential supplies to the Maldives at the request of the Maldives’ government, despite a general restriction of exports intended to keep India’s domestic prices from rising in the run up to Indian elections. Then, in May 2024, India removed its 80 military personnel stationed in the Maldives, replacing them with civilian staff in line with the Maldives government’s request.
Status
In September 2024 two of the Maldives’ suspended deputy ministers – Shiuna and Shareef – officially resigned their positions, citing personal reasons, ahead of an October visit to India by President Muizzu to India. During his state visit to New Delhi, President Muizzu called India a “valued partner” and subsequent to the trip India announced that it would provide currency relief to the crisis-hit Maldives’ economy.
Reference list
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Bhushan, B. 2024. “India-Maldives row: Coercive diplomacy often backfires.” Deccan Herald. January 12. Available at: https://www.deccanherald.com/opinion/india-maldives-row-coercive-diplomacy-often-backfires-2846305
Goksedef, E. 2023. “Maldives election: Pro-China candidate Muizzu wins presidency.” BBC News. October 1. Available at: https://www.bbc.com/news/world-asia-66972981
Jayasinghe, U. 2024. “Two Maldivian ministers who disparaged India’s Modi resign ahead of Muizzu’s Delhi trip.” Reuters. September 11. Available at: https://www.reuters.com/world/asia-pacific/two-maldivian-ministers-who-disparaged-indias-modi-resign-ahead-pm-muizzus-delhi-2024-09-11/
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Kaushik, K., Schmollinger, C. and Lawson, H. 2024. “President of Maldives to visit China Jan 8-12, Beijing says.” Reuters. January 6. Available at: https://reuters.com/world/asia-pacific/president-maldives-visit-china-jan-8-12-beijing-says-2024-01-05/
Mallempati, S. 2024. “Maldives–India political fallout tests tourism ties.” East Asia Forum. May 9. Available at: https://eastasiaforum.org/2024/05/09/maldives-india-political-fallout-tests-tourism-ties/
Reuters. “Maldives suspends three deputy ministers for insulting Indian Prime Minister Narendra Modi.” ABC News. January 8. Available at: https://www.abc.net.au/news/ 2024-01-08/maldives-government-suspends-deputy-ministers-for-insulting-modi/103295356
Shamin, S. 2024. “Why is pro-China Maldives leader Muizzu seeking to mend India ties?” Al Jazeera. October 10. Available at: https://www.aljazeera.com/news/ 2024/10/10/why-is-pro-china-maldives-leader-muizzu-seeking-to-mend-india-ties
The Economic Times. 2024a. “India-Maldives diplomatic row: CAIT asks traders to refrain from dealing with island nation.” January 9. Available at: https://economictimes.indiatimes.com/news/economy/foreign-trade/india-maldives-diplomatic-row-cait-asks-traders-to-refrain-from-dealing-with-island-nation/articleshow/106654282.cms?from=mdr
The Economic Times. 2024b. “Indian tourists shun the Maldives; industry feels the pinch: Reports”. March 14. Available at: https://economictimes.indiatimes.com/industry/ services/travel/indian-tourists-shun-the-maldives-industry-feels-the-pinch-reports/articleshow/108492014.cms?from=mdr