Modi In Maldives: Indian MSMEs Eye Investment, Expansion Of Trade

Sources familiar with the development said that the MSMEs based in the southern states are particularly interested in expanding business with the Maldives, which offers a flexible labour and tax regime. It is also understood that Male is now quietly wooing these MSMEs and start-ups for greater economic cooperation and investments. 

"A number of companies, especially MSMEs, are not only looking to expand trade with the Maldives, but are also interested in investing there, as the regulatory environment is conducive and welcoming. This is a win-win — the move will boost employment among local people and also help our MSMEs grow," a person interested in investing in the Maldives said.

Proximity is another important factor. A flight from Kerala to Male just takes an hour and a half. The common areas of interest are fisheries, green energy, food processing, pharmaceutical products and handicrafts. "But the Maldivians are looking to engage more with Indian businesses and government for exchange of knowledge," the person said.

The Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA) have already allowed settlement transactions in both Indian Rupee and the Maldivian Rufiyaa (MVR).

While Male has been actively trying to woo Indian MSMEs and other businesses it may not b easy for the import-dependent country which has limited land. Many of its islands have been developed on reclaimed land and are scattered. Surrounded by water, several of them face serious risks. 

"These are factors which will come into play," he added.

Meanwhile Modi, who has been invited as the guest of honour at the special celebrations, is set to kick off several joint projects.

Already, talks of a free trade agreement between India and the Maldives are on. An investment treaty could be inked during Modi’s two-day visit. The Maldives had signed an FTA with China that came into effect from January 1 this year.

Several Biggies Already Present In The Maldives

Indian companies are keen to tap sectors such as renewable energy, artificial intelligence, digital infrastructure, tourism, and pharmaceuticals. 

Earlier, the Adani Group had shown interest in investing in the Maldives' infrastructure sector, especially in the development of ports. Adani Ports & SEZ (APSEZ) has expanded its international footprint significantly through acquisition, as well as the development of new ports. It is already present in Malaysia, Israel and Sri Lanka, among other countries.

Besides APSEZ, the Tata Group has also invested in several sectors in the Maldives. These include power, housing and even education. 

Modi’s First Visit Since Muizzu Became President

This is Modi’s first visit to the Maldives since President Mohamed Muizzu, known for his 'India Out' campaign, took over in 2023. 

“The PM’s visit to Male is a positive development, and will mark a shift in foreign and economic policies for both countries. From ‘India Out’ to ‘India In’, the turn has been significant for New Delhi, and this could be due to the positive sentiment and support for India among the people of the island state,” D Dhanuraj, chairman, Centre for Public Policy Research, told The Secretariat.

He pointed out that it needs to be seen if the defence collaborations between the two countries get a boost. “India is also seen as a more reliable neighbour compared to other countries, including China,” Dhanuraj added.

Indian Tourist Flow Into The Maldives

Indians were among the largest number of tourists to the Maldives during 2021-22. According to the Maldivian tourism ministry, more than 2,91,700 Indian tourists visited the archipelago in 2021, which was a market share of 22 per cent, followed by Russians. 

In 2023, the number of Indian tourists to the Maldives stood at 2,09,193. In 2024, after Indian tour operators began blacklisting the archipelago, numbers fell to a mere 1,30,805. 

The problem aggravated when, last year, some Maldivian ministers openly ridiculed the Indian PM for promoting Lakshadweep as a tourist destination. Modi, who visited Lakshadweep, urged Indian tourists to choose the Indian archipelago over the Maldives. 

A dent in tourism can hit the Maldives' economy. The tourism sector accounts for about 28 per cent of its GDP, generating 60 per cent of its foreign exchange earnings. Despite these hiccups, leaders of both countries have been keen to mend ties. 

India’s Assistance To The Maldives

Earlier this year, India supported the cash-strapped archipelago with a rollover of the US$ 50 million in treasury bills. 

“Since March 2019, the Government of India has been facilitating subscription of several such treasury bills by the SBI and rolling them over, annually, interest-free, to the Government of the Maldives. This has been done under a unique government-to-government arrangement, as emergency financial assistance to the Maldives,” a press statement issued by the High Commission of India in the Maldives said.

With the Indian government earmarking Rs 5,483 crore as foreign aid in the current fiscal, compared to Rs 4,883 crore in the previous, the Maldives received the highest increase in assistance, from Rs 470 crore in the revised 2024-25 budget, to Rs 600 crore in 2025-26, according to DD News.