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Indian Prime Minister Narendra Modi has announced a $565 million credit line to the Maldives to support infrastructure development and boost economic and strategic cooperation between the two nations. The announcement came during Modi’s two-day official visit to the Indian Ocean archipelago, which began on Friday.
This visit, Modi’s first to the Maldives since winning a third term in 2024, marks a significant push by India to restore and deepen ties with the Maldives after a period of diplomatic tension. India and China have long vied for influence in the strategically located island nation, which sits along key shipping routes in the Indian Ocean.
Major Investment Aimed at Infrastructure and Security
Speaking during a joint press appearance in Malé with Maldivian President Mohamed Muizzu, Modi said the credit line would finance multiple projects aligned with the priorities of the Maldivian people.
“This funding will support key initiatives in infrastructure, housing, healthcare, and education. It reflects India’s unwavering commitment to the Maldives as a close neighbor and trusted partner,” Modi stated.
In addition to economic support, the Indian prime minister also pledged continued assistance in strengthening the Maldives’ defence capabilities. “India remains the first responder in times of crisis and will always stand by the Maldives for peace, security, and prosperity in the region,” Modi said.
Free Trade Talks and Bilateral Investment Agreement
India and the Maldives also launched free trade negotiations aimed at expanding bilateral commerce. The two sides are expected to finalize a new investment agreement that will further encourage Indian businesses to engage in the Maldivian economy, particularly in sectors like tourism, logistics, and renewable energy.
President Muizzu welcomed the agreements and emphasized the role Indian support has played in bolstering his country’s development goals.
“The credit line from India will enhance our national security and public service delivery, including hospitals, schools, and housing for our people,” he said. “India’s assistance with essential commodities and development funding remains a key pillar of our bilateral cooperation.”
A Delicate Turn in India-Maldives Relations
Modi’s visit comes at a time of renewed diplomatic engagement following a rocky period after President Muizzu’s 2023 election win. Running on an anti-India platform, Muizzu had previously taken steps that strained ties with New Delhi, including:
Prioritizing a visit to China over India
Calling for the withdrawal of Indian military personnel stationed in the Maldives
Criticizing India’s involvement in Maldivian internal affairs
These moves prompted concerns in India about growing Chinese influence and the possible loss of a critical ally in the region. However, relations have since warmed as Muizzu softened his rhetoric and sought to mend fences.
India’s financial support in preventing a debt default during a tourism slump, critical for the Maldives’ $7.5 billion economy, was a turning point. The subsequent visits and talks between Modi and Muizzu in 2024 paved the way for this new phase of cooperation.
Strategic Presence in the Indian Ocean
The Maldives, with its population of around 525,000, holds strategic value due to its geographic location in the heart of the Indian Ocean. India’s investments, including Hanimaadhoo International Airport, which Modi inaugurated remotely on Saturday are seen as efforts to bolster economic ties while maintaining a security presence in the region.
The airport expansion project is part of a larger effort to improve connectivity within the Maldives and strengthen its position as a tourism and logistics hub. India’s support in this venture reinforces its broader strategy of “neighborhood first” and countering China’s growing influence through infrastructure diplomacy.
Modi Attends Maldives’ Independence Day
Modi also attended the 60th Independence Day celebrations in Malé on Saturday, a symbolic gesture underscoring India’s renewed commitment to friendly relations with the island nation. His presence was widely viewed as an attempt to reinforce bilateral trust and signal India’s interest in long-term collaboration.
The visit highlights a shift in India’s foreign policy dynamics in South Asia, opting for diplomacy, strategic aid, and development support to secure influence in smaller neighboring countries that face competing interests from global powers like China.
What Comes Next?
With multiple agreements in motion, including trade, infrastructure, and security partnerships, the Modi-Muizzu meeting sets the tone for a “new chapter” in India-Maldives relations. Observers say the outcome of these initiatives will depend on sustained political goodwill and how both nations navigate their domestic and regional pressures.
India’s growing influence in the Indian Ocean, backed by tangible investments and diplomatic outreach, appears to be reasserting its role as a regional anchor, especially as China continues to expand its footprint through similar infrastructure deals.
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