Indian citizens and companies have started shunning Maldives as a travel destination after ministers of the island nation made derogatory comments against Prime Minister Narendra Modi.

While Maldives has taken action by suspending three of its ministers, including Deputy Minister Mahzoom Majid, who made the offensive remarks against Modi, the tourism-reliant country could still take a hit to its economy if the backlash escalates.

Why It Matters: India has been the world’s largest tourist market for the Republic of Maldives from December 2020 to June 2023, according to the Ministry of Tourism Maldives. Despite standing second in the number of tourists in November 2023, with 18,905 Indian visitors accounting for 11.6% of total visitors, India has consistently held a prominent position in Maldives tourism.

India rose from fifth to second position in 2019, with 1.66 lakh arrivals, nearly double the figure in 2018. Despite challenges posed by the COVID-19 pandemic in 2020, the Maldives welcomed around 63,000 Indian visitors. India maintained its status as the largest tourist market in 2021 and 2022, with approximately 2.91 lakh (23% market share) and 2.41 lakh (14.4% market share) arrivals, respectively.

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In 2023, India became the second most significant source of tourists for the Maldives, contributing to 18.3 lakh tourist arrivals, as of November 2023, and holds a 10.9% market share, according to Maldives Tourism Ministry data.

How Much It Could Hurt: Tourism plays a vital role in the Maldives economy, constituting around 25% of its gross domestic product. Additionally, over a third of employment opportunities in the Maldives are directly related to the tourism industry, and when considering related sectors, the industry’s impact on overall employment reaches almost 70%.

India has been actively involved in supporting various sectors in the Maldives. The Indian Ministry of External Affairs (MEA) has signed eight infrastructure projects to aid the Maldives’ tourism industry. These projects include the water and sanitation on 34 Islands Project, the Hanimadhoo International Airport Redevelopment Project and the Gan International Airport Redevelopment Project.

Apart from infrastructure projects, India has been a key partner in developing human resources in the Maldives. Many Indians work in the hospitality and tourism industry on different islands and resorts, contributing as technicians, engineers, managers, accountants and in various other roles.

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