India loosens purse strings to keep Maldives from drifting towards China

Modi made the remarks after holding wide-ranging talks with Maldivian President Mohamed Muizzu, focusing on consolidating cooperation in areas of trade, defence and infrastructure.

New Delhi: India on Friday not only further loosened its purse-strings for the Maldives but also made debt repayment easier for the Indian Ocean nation, which had been drifting towards China till about a year ago.

As Prime Minister Narendra Modi and President Mohammed Muizzu met in Malé, they called for further strengthening defence and maritime security cooperation between India and the Maldives – sending out a message to China.

The two leaders jointly inaugurated the new building of the Ministry of Defence of the Government of the Maldives, constructed with financial support from India.

Overlooking the Indian Ocean, the eleven-storey building is a symbol of the strong and long-standing defence and security cooperation between the two countries, New Delhi noted, subtly asserting its role as the net security provider to the region. Modi handed over to Muizzu 72 vehicles and equipment for use by the Maldives National Defence Force.

Modi and Muizzu announced the finalisation of the Terms of Reference for a proposed Free Trade Agreement and agreed to start negotiations for a Bilateral Investment Treaty.

India announced a new Line of Credit of Rupees 4850 crores (approximately $550 million) to support the “infrastructure development and other activities” in the Maldives.

New Delhi amended the terms of the soft loans it had earlier extended to Malé. The amendment will reduce annual debt repayment obligations of the Maldives to India by 40% from $51 million to $29 million.

Muizzu personally received Modi as he landed in Malé after flying from London at the end of his visit to the UK.

An ‘India Out’ campaign had catapulted Muizzu to the office of the president of the Maldives in November 2023. He had replaced his predecessor Ibrahim Solih’s ‘India First’ doctrine with pro-China policies and made India withdraw all military personnel deployed in the archipelago for humanitarian evacuations from far-flung islands.

Muizzu, on October 7, 2024, met Modi in New Delhi and agreed to let New Delhi deploy “defence platforms and assets” in the Maldives – signalling a turnaround in his approach, which followed India’s support to the Indian Ocean sail through an imminent economic crisis.

“India is the closest neighbour of the Maldives,” Modi said, after his meeting with Muizzu in Malé on Friday.

“The Maldives has a special place of importance in India’s Neighbourhood First policy and MAHASAGAR vision. We have always been playing the role of first responder to help the Maldives, be it during a crisis, a disaster or during the pandemic," he said.

“India remains a key source market for Maldivian tourism. We discussed ways to expand this vital sector through enhanced cooperation and connectivity, including the commencement of direct flights to further enhance this connectivity,” said Muizzu.

The two leaders witnessed the exchange of six Memorandums of Understanding for cooperation in the fields of fisheries and aquaculture, meteorology, digital public infrastructure, UPI, Indian pharmacopoeia and concessional Line of Credit.

The two leaders also virtually inaugurated a road and drainage system project in Addu city and 6 High Impact Community Development Projects in other cities.