India on Friday announced a ₹4,850 crore (USD 565 million) line of credit for the Maldives and committed to speeding up the signing of a free trade agreement, with Prime Minister Narendra Modi reiterating that New Delhi is the "most trusted" ally of the island nation in the Indian Ocean.
In a major economic relief initiative, India also offered to reduce the Maldives' annual debt service by 40 percent — from USD 51 million to USD 29 million — in order to enable the country to handle its continued economic difficulties more effectively.
These historic announcements were the culmination of a wide-ranging series of talks between Prime Minister Modi and Maldivian President Mohamed Muizzu, where the two leaders discussed ways to enhance cooperation in trade, defence, maritime security, and infrastructure development.
Six bilateral agreements were signed during discussions, including cooperation in fisheries, aquaculture, meteorology, digital public infrastructure, UPI integration, and Indian pharmacopoeia, in addition to making the Indian line of credit official.
Friendship comes first for us," Modi asserted in an address to the media. "The foundation of our relationship is older than history, and as deep as the sea," he said, marking a significant breakthrough in bilateral relations, which had witnessed strains after Muizzu's rise to power in 2023 on an "India Out" ticket.
Modi said, "To provide a fresh impetus to our development partnership, we have agreed to provide a line of credit of USD 565 million (Rs 4,850 crore) to Maldives." He assured that this money would go for infrastructure projects prioritized by the people of Maldives.
Responding, President Muizzu appreciated India's steadfast support, saying, "India's sustained support to the Maldives in the form of export of critical commodities is an important aspect of our bilateral engagement under the historically existing trade agreement."
Foreign Secretary Vikram Misri pointed out at a media briefing that one of the major takeaways from the negotiations was the intention to lower the Maldives' annual debt servicing burden by 40 percent.
While China's increasing footprint in the Indian Ocean region was not laid out explicitly, discussions at the delegation level did address the regional security realities. In response to a question, Misri said, "India continues to work closely with the Maldives on any issue that might impinge not just our security but the common security of the region."
Looking to the future, Modi declared that talks for a bilateral investment treaty were ongoing and a free trade pact would be finalized shortly. Modi highlighted the role of the digital economy in boosting tourism and commercial exchange.
"The pace at which UPI is being promoted in Maldives will give a boost to tourism and retail as well," Modi stated, welcoming UPI, RUPAY card acceptance, and local currency trade agreements.
The two leaders also jointly opened various India-funded developmental projects, such as the newly constructed defence ministry building in Male, road and drainage facilities in Addu city, and 3,300 housing units in Hulhumale. Modi also handed over 72 vehicles and equipment to the Maldives National Defence Force.
Terming the new defence building as a "building of trust made of concrete," Modi added, "India will remain committed to Maldives to help develop its defence capabilities. Peace, stability and prosperity in the Indian Ocean region is our shared aim."
His statement was made against the backdrop of India's continued concern about Beijing's strategic interest in the region and the Maldives, and its increasing bonhomie with the Maldives.
Reiterating the strategic significance of Maldives, Modi said, "The Maldives has a key role in both India's 'Neighbourhood First' initiative and our MAHASAGAR vision." He further said, "India is also glad to be Maldives' most reliable friend. Whether it is a disaster or a pandemic, India has been always present as a 'first responder'."
Taking recourse to President Muizzu's previous visit to New Delhi in October 2023, Modi stated that both nations had at the time envisioned a comprehensive economic and maritime partnership. "Now it is becoming a reality. And as a result of that, our relations are touching new heights," he added.
He also reiterated, "We have made some progress to expedite our economic cooperation. For expediting mutual investment, we will now start working on finalizing the bilateral investment treaty. Negotiations on a free trade agreement have also commenced."
To commemorate 60 years of diplomatic relations, Modi and Muizzu also issued a special postage stamp celebrating traditional maritime legacy: Indian Uru, hand-built in Kerala's Beypore shipyards, and Maldivian Vadhu Dhoni fishing vessel.
The postage stamp issued today, featuring the traditional boats of both nations, reflects that we are not only neighbours, but fellow travellers as well," Modi said.
The Maldives visit of Prime Minister Modi is the concluding part of his two-nation tour, having come directly from the United Kingdom. After landing in Velena International Airport, he was warmly received by President Muizzu and top cabinet ministers. A ceremonial reception and guard of honour were later organised in his honour at Republic Square in Male.
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