India announced a ₹4,850 crore (US $565 million) Line of Credit to the Maldives during Prime Minister Narendra Modi’s two-day state visit, marking a significant renewal of ties with the island nation. According to Mint, concurrently, India agreed to ease debt repayment on existing credits and initiated free trade agreement (FTA) negotiations, showcasing a strategic pivot in mutual relations.
Massive Credit Package and Debt Relief
The fresh Line of Credit, denominated in Indian rupees for the first time, aims to support infrastructure, social sector, healthcare, defence and housing projects in the Maldives. India also signed an amendatory agreement to reduce the Maldives’ annual debt repayment by 40 percent, relieving its financial burden and reinforcing New Delhi’s role as a development partner.
Diplomacy: “Deep as the Ocean” Friendship
At a joint press event in Malé, PM Modi reaffirmed India’s commitment, calling the Maldives its “most trusted friend” and emphasising that their ties run “older than history and as deep as the ocean.” He stressed that the Maldives occupies a central place in India’s Neighbourhood First policy and Vision MAHASAGAR—a holistic vision for Indian Ocean security and cooperation.
Maldivian President Mohamed Muizzu, who earlier campaigned with an “India Out” stance, described the Indian assistance as a lifeline. He praised India’s prompt disaster response and development support—a marked shift from the earlier apprehensions.
High-Level MoUs and Strategic Pacts
During the visit, India and the Maldives signed eight key pacts. These included MoUs on fisheries and aquaculture collaboration, meteorological cooperation between India’s Institute of Tropical Meteorology and Maldives Meteorological Services, and digital governance initiatives. A landmark agreement introduced India’s Unified Payments Interface (UPI) system in the Maldives, to promote seamless digital payments.
Additionally, they launched talks for a bilateral investment protection treaty, alongside formalising the free trade agreement talks, whose terms of reference were finalised during the meeting.
Boosting Defence and Maritime Cooperation
India also delivered tangible assets: 3,300 social housing units, 72 vehicles, and advanced “Health Cube” medical units (capable of providing aid to 200 casualties for 72 hours) were handed over to the Maldives National Defence Force and immigration services. PM Modi also inaugurated India-funded infrastructure upgrades, including a new Ministry of Defence building and essential amenities in Addu City.
These moves firm up strategic cooperation in defence and regional security, signaling a renewed commitment to Indian Ocean stability.
From “India-Out” to Strategic Convergence
The visit represents a remarkable turnaround from earlier strain. Since President Muizzu’s anti‑India rhetoric in late 2023, bilateral ties had cooled. However, India’s swift financial support—including emergency aid and currency swap facilities earlier—helped avert economic collapse, bringing relations back on a cooperative footing.
The visit also marks India’s commitment to serve as a first responder—providing aid during emergencies and supporting Maldives in COVID recovery, natural disasters, and infrastructure development.
What Lies Ahead
The credit line and partnerships signify a strategic recalibration in India–Maldives ties. Upcoming FTA and investment treaty negotiations are expected to unlock trade and development potential for both nations. Enhanced cooperation in maritime security, sustainable fisheries, and digital infrastructure further underlines India’s growing footprint in the Indian Ocean region.
For the Maldives, the financial support and diplomatic reset reaffirm its bond with India and signal stability in the face of external influences. For India, the visit is a statement on its continued neighbourhood-led leadership and strategic foresight in regional diplomacy.
Photo Source: Mint
