What Growing Concerns Of India Could Mean For The Tourism Economy Of Maldives

Famously known as a vacation spot across the world, Maldives found itself in the middle of a diplomatic storm after comments of several government officials sparked anger in India. Some ministers of the Maldives government posted inappropriate remarks on Indian Prime Minister Narendra Modi after his recent visit to Lakshadweep. India's high commission in the country reportedly registered its protest with the local government over the comments made by its members.

The matter started after PM Modi posted pictures of his visit to the Union Territory of Lakshadweep. In his posts, the PM urged people to explore the location as a tourism spot. He wrote, "For those who wish to embrace the adventurer in them, Lakshadweep has to be on your list."

The posts were seen as a bid to promote an alternative tourist hub in the Indian ocean, attracting attention away from Maldives. For the unversed, tourism makes up for over 25 per cent of the island nation's GDP and it is one of the most sought after location in the Indian ocean for vacationers. The bid to promote Lakshadweep, located over 750 kilometers away from Maldives, was not received well by some members of the Maldives government.

Zahid Rameez, a council member of Progressive Party of Maldives, reacted to PM Modi's photos, saying, "The move [of promoting Lakshadweep] is great. However, the idea of competing with us is delusional. How can they provide the service we offer?" Deputy Minister of Youth Empowerment Mariyam Shiuna posted objectionable remarks against the prime minister. After receiving severe backlash, the post was deleted.

In a bid to control the damage, Foreign Ministry of Maldives distanced itself from the comments of the ruling party members. It said in a statement, "The government of Maldives is aware of derogatory remarks on social media platforms against foreign leaders and high-ranking individuals. These opinions are personal and do not represent the views of the government of Maldives."

While Maldives has tried to allay concerns of India, the clarification has not managed to calm down the calls to boycott the country as a tourism destination by several prominent personalities in India.

Hitting The Tourism Sector

Immediately after the comments went viral, social media platforms in India were abuzz with the calls to divert tourism spending towards local island alternatives such as Andaman and Nicobar and Lakshadweep. The numbers tell why the diversion of Indian tourists could spell trouble for Maldives.

As per the data released by Maldives government on tourists arrivals in 2023 as of December 26, Indians topped the chart with over 2 lakh arrivals, followed by Russia and China. Tourists from India hold a market share of 11.2 per cent in the number of visitors.

Constituting over 25 per cent of GDP, the stability of the tourism sector is vital for the island nation's economy. Moreover, the next biggest share of 12.5 per cent in GDP belongs to the transportation and communication segment which is closely allied with the travel sector.

Highlighting the importance of India for the island nation, former President Mohamed Nasheed wrote on X, "What appalling language by Maldives Government official Mariyam Shiuna towards the leader of a key ally, that is instrumental for the Maldives’ security and prosperity. The Mohamed Muizzu government must distance itself from these comments and give clear assurance to India they do not reflect government policy."

The anger against the Maldives government led several celebrities, including Amitabh Bachchan, Sachin Tendulkar and Akshay Kumar, to call for promotion of Indian tourism sector. While Lakshadweep and Andaman and Nicobar Islands have emerged as a possible alternative, investors tracking the location suggest sustained focus on developing these destinations.

Atul Thakkar, Director of Investment Banking at Anand Rathi Advisors, opined that there are some logistical challenges which prevent the emergence of Indian alternatives. He said, "To reach Lakshadweep, one needs to land at Cochin airport and then take bus and ferry. Lakshadweep airport at Agatti has limited flights. Similarly, Andaman's Port Blair airport can handle limited traffic." However, he added that the PM's visit can act as a catalyst for the destinations.

CEIC data shows that the tourism has grown at a brisk pace in Andaman and Lakshadweep. In 2015, the peak arrivals in the last decade of over 17,000 tourists were recorded in Lakshadweep. However, in the following years, the arrivals fell to a low of 3,462 in 2020. Post pandemic, the numbers surged to 22,800 by the end of 2022. While domestic tourists have shown some interest in the island, foreigners number slumped to 100 in 2022. Similarly, the local arrivals in Andaman fell from over 5 lakh in 2019 to 2 lakh in 2022. Foreign arrivals also slumped from 16,206 to 4,500 in the same period.

While the country works on developing its own alternatives to Maldives, the latest exchange between the governments came amidst broader geopolitical concerns since the elections in island nation.

India's Geopolitical Worry

When the pro-China Mohamed Muizzu assumed office after defeating the pro-India Nasheed in September elections, observers had highlighted the possibility of radical shift in Maldives approach. Muizzu had campaigned with the slogan of "India Out", sparking concerns in New Delhi.

From a geopolitical perspective, the location of Maldives in the Indian Ocean is considered important which has sparked a competition between Indian and Chinese policymakers to invest in the island. India has consistently increased the aid it provides to the country in the last few years.

Explaining the importance of Maldives' location, a note by Research Fellow Abhay Kumar Singh on Manohar Parrikar Institute of Defence Studies and Analyses website read, "Located at the southern and northern parts of this island chain are the only two passages through which ships can pass safely. Both these sea lanes of communication (SLOCs) are critical for maritime trade flow between the Gulf of Aden and Gulf of Hormuz in West Asia and the Strait of Malacca in Southeast Asia. While the Indian Ocean is considered as the key highway for global trade and energy flow, Maldives virtually stands as a toll gate."

India's relations with the country have come into focus since Muizzu's appointment. Recently, top officials of the Maldives government had said that it would not renew the agreement for joint hydrographic survey with India. Amidst the diplomatic row with India, Maldives President left on Sunday night for the state visit to China on the invitation of Chinese President Xi Jinping.

Whether the promotion of Lakshadweep and the subsequent comments on PM Modi act as a turning point for how India sees Maldives will become clear in the time to come.