India Extends $565 Million Credit Line to Maldives, Resets Ties
India has extended a $565 million (₹4,850 crore) line of credit to the Maldives to bolster a strategic reset in bilateral relations. During a state visit by PM Narendra Modi, the two nations also agreed to negotiate a Free Trade Agreement and advance a bilateral investment treaty. The move signals a significant diplomatic and economic realignment after a period of strained ties under President Mohammed Muizzu's government, aiming to counter growing Chinese influence and reinforce India's 'Neighbourhood First' policy.
Unpacked:
India and the Maldives have shared close diplomatic, economic, and cultural ties since the Maldives gained independence in 1965. India was one of the first countries to recognize the Maldives and has provided ongoing economic and strategic support, viewing the Maldives as an important partner in the Indian Ocean region.
Relations became strained after President Muizzu called for the removal of Indian military personnel from the Maldives and threatened to review existing agreements, signaling a shift in the Maldives' foreign policy and raising concerns in India about China’s growing influence.
China has sought to expand its economic and strategic influence in the Maldives, investing in infrastructure and development projects. India views China’s presence as a challenge to its own influence in the Indian Ocean and seeks to counterbalance it by strengthening ties with the Maldives.
India’s 'Neighbourhood First' policy prioritizes building strong bilateral relations with its immediate neighbors, including the Maldives, through economic assistance, trade, and strategic cooperation to ensure regional stability and counter external influences like China.