How Does the India-Maldives Conflict Affect the Global Market?

Have you ever thought about a scenario where two strategic partners conflict with each other in the trade arena? Where one country is a king of the Indian Ocean and the other holds a strategic location and plays an important role in ensuring the free flow of international trade of Export-Import.

The Countries are India and Maldives, for some reason, these countries have alarmed the world about a potential decline in trade across the world.

Despite the potential decline in trade, this blog will the business opportunities.

India and Maldives – A strategic partner

India is the 5^th largest economy in the world in terms of GDP and the 3^rd largest in terms of purchasing power parity (PPP). In contrast, Maldives is a group of small islands, and crossed more than 500 million dollars in trade with India, along with a currency swap agreement between RBI (Reserve Bank of India) and the monetary authority of Maldives to ease the flow of Import-Export of goods.

According to the Economic Complexity Index (2021), India ranks 14^th and 11^th in Export and Import respectively, and Maldives ranks the bottom.

India-Maldives conflict – A reason for concern

The diplomatic relations between India and Maldives start deteriorating with a political shift under the Maldives president’s policies and disparaging remarks by their minister against the Indian prime minister. This conflict was further ignited by a picture of the Indian Prime minister on social media promoting Lakshadweep as a tourist hub. This whole scenario resulted in the cancellation of the Maldives trip by thousands of Indians.

Impact on India-Maldives trade

Tourism – The Maldives economy is heavily dependent on foreign tourists to run its economy, and the major sources of tourists are from India. Ongoing conflict allows the Indian island Lakshadweep to represent itself as a tourist hub for both domestic and international tourists.

Bilateral trade – More than $500 million worth of trade will be impacted including drug and pharmaceutical, cement, agriculture and many more. India’s imports from the Maldives primarily comprise scrap metals.

At the same time, Indian exports to the Maldives include a variety of goods like engineering and industrial products, drugs and pharmaceuticals, cement and agricultural produce etc.

Let’s understand the trade value by the given data from the year 2020-2023.

The following mention table presents the overall trade data from the year 2020-2023. In 2022, the trade value has doubled. To understand this, let’s try to explore the trade value of commodities between India and Maldives.

*****Trade Value Per Million Dollars

It’s very clear from the above table that trade value has seen an upward movement since 2022. Before 2022, the exchange of goods was below $20M for most of the traded commodities. However, the move taken by the government to strengthen the partnership resulted in double-digit growth for mentioned commodities.

Unfortunately, with the growing tension, this million-dollar trade is in the pendulum, opening the door for the US and the EU.

You may have heard the concept that the loss of someone is the profit of someone. This concept is well suited to the current position of the India-Maldives conflict. Let’s learn.

An appeal to promote Lakshadweep Island for domestic tourism by Indian Prime Minister, Mr Modi, opened the sector for both domestic and foreign investment

However, the potential threat to ban Indian Pharmaceutical drugs by the Maldives may result in higher costs for acquiring the same drug, which may be 100-200 times higher than Indian drugs. For instance, the Cost of an Asthma inhaler from the US-$380, EU-$180, China-$40 and India is at $2.

To enter the market, companies have to make their pharmaceutical products affordable. Apart from the Pharmaceutical sector, there are numerous sectors for growth.

Amid conflict – An opportunity for the US and Europe to export

Tourism is not only related to visiting a place, but it also includes various things like infrastructure (Hotels, villas, construction of roads, rail, highways etc.), cement, clothes, handicraft items and many more things for the overall development of the sector.

Before entering any business, a company needs a proper investigation into the launched product, the connectivity of the country with the rest of the world, annual traffic etc. What if all information is provided on a single platform? To get it, visit our Export Genius platform and find what you need for your business with all trade-related data.

Let’s learn how US and EU businesses will be served with golden opportunities for trade-related growth.

US Export to World

The US is a crucial player in international trade as a global economic powerhouse. The trade of value is sometimes more than some country’s GDP. In 2023, US exports to the world stood at $1685 B which is continuously growing since 2020. Look at the given table.

Mineral fuels and oils are the most traded commodities and registered a more than 100% growth from 2020 to 2022. Not only this segment but other products export also increased. Data related to various commodities have been mentioned below.

**********Trade Value Per Billion Dollars

 Europe – The Largest Trading Block

The EU is the largest trading bloc in the world with the connective economic power of its member countries. The trade value of this bloc achieved a milestone in 2022 with $8871 billion, a massive jump in trade value from 2020. The data mentioned in the below table present insight into the view of exports from the EU.

Apart from total exports of the EU to the World. let’s discuss the export commodities of the EU, for instance, nuclear reactors, boilers etc. are the most traded commodity with $946.29 billion in 2022, and the trade value of Minerals and fuels in 2022 stood at $1276.52 billion.  Detailed data on export trade are mentioned below.

Despite India-Maldives conflicts, opportunities for doing business lie with those who are adaptable and risk evaluators. By navigating these factors, businesses can ensure sustainability in their operations.