India China partnership: Why is Maldives launching India's RuPay service?

Despite recent turbulence in their bilateral relations, the Maldives is set to launch India’s RuPay service soon. This move, according to a senior Maldivian minister, is expected to strengthen the Maldivian Rufiyaa.
In recent developments, the Maldives announced that India and China will collaborate to facilitate import payments in their respective currencies. This policy change has the potential to reduce the Maldives' annual import costs, currently at $1.5 million, by nearly half.

RuPay: Expanding Horizons

RuPay, developed by the National Payments Corporation of India (NPCI), is India’s first global card payment network. It boasts widespread acceptance at ATMs, POS devices, and e-commerce websites across India. Minister of Economic Development and Trade, Mohamed Saeed, highlighted the upcoming launch of RuPay while discussing bilateral trade developments between India and China.

“The upcoming launch of India's RuPay service is anticipated to further bolster the Maldivian rufiyaa (MVR),” Saeed told state-run PSM News on Wednesday. He emphasised that addressing the dollar issue and reinforcing the MVR is a top priority for the current administration. However, the exact launch date remains unannounced.

Formal Utilisation of RuPay in Maldives

Last week, CorporateMaldives.com reported that Saeed confirmed the formal use of RuPay for transactions in rupees within the Maldives. "We are currently engaged in discussions with India to explore avenues for facilitating payments in rupees,” the minister said.

During President Ibrahim Mohamed Solih's official visit to India in August 2022, an India-Maldives joint statement noted: “The two leaders welcomed the ongoing work to operationalize the usage of Rupay Cards in Maldives and agreed to consider further measures to boost bilateral travel and tourism and economic inter-linkages.”

Growing International Partnerships

In recent years, numerous banks and payment companies from various countries have partnered with NPCI International Payments Ltd (NIPL), the international arm of NPCI, to facilitate the acceptance of UPI and RuPay in diverse forms.

Bilateral Relations Strained

Since pro-China President Mohamed Muizzu assumed power last November, Maldives-India relations have been strained. The recent repatriation of over 80 Indian military personnel from the Maldives, who were manning three aviation platforms, has further soured bilateral ties.

As the Maldives prepares to launch RuPay, the move signifies a critical step in economic collaboration, despite existing diplomatic challenges.