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Swati Sood
31 December 2025 |
What happened?
On 25 July, Prime Minister Narendra Modi landed in Male, Maldives. He was welcomed by Maldivian President Mohammed Muizzu and the Maldivian Foreign Minister, Defence Minister, Finance Minister, and the Minister of Homeland Security.
On the same day, Prime Minister Modi held bilateral meetings with Maldivian President Mohammed Muizzu, emphasizing Maldive's role in India’s Neighborhood First policy and the MAHASAGAR vision. Both leaders unveiled a new building of the Ministry of Defence of the Maldives and released a stamp to commemorate 60 years of ‘India-Maldives friendship.’
On the same day, India and the Maldives signed four MoUs and various Agreements. MoUs covered various sectors, including the United Payments Interface (UPI), digital public infrastructure, fisheries, and meteorology. India also extended to the Maldives a Line of Credit (LoC) worth INR 4,850 crore. Additionally, India and the Maldives have agreed upon Terms of Reference for the initiation of negotiations for signing a Free Trade Agreement (FTA).
On 26 July, Prime Minister Narendra Modi was the Guest of Honour at the Maldives’ 60th Independence Day celebrations
What is the background?
First, a brief note on India-Maldives relations. India and the Maldives’s ties can be traced back to medieval maritime trade. Such cultural exchanges, particularly from the states of Tamil Nadu and Kerala, shaped the country’s language, cuisine, and boat-building traditions. A strong political foundation underpins relations between the two countries. Diplomatic relations between the two countries were established in 1965. In 1988, India launched Operation Cactus to militarily intervene to prevent a coup to overthrow then-President Maumoon Abdul Gayoom. In 2008, India also supported the country’s transition to democracy.
Second, recent tensions between India and the Maldives. The ‘India Out’ campaign was launched in 2020, notably led by then-opposition leader and current president Mohammed Muizzu. In January 2024, derogatory remarks made by Maldivian cabinet ministers against India and Prime Minister Narendra Modi triggered a diplomatic confrontation between the two nations and saw Indians boycotting the Maldives. Subsequently, a majority of the remaining Indian military troops withdrew from the country. Another flashpoint has been the closeness of the current government with China in terms of economic and security cooperation.
Third, India’s Neighborhood First policy’ and the economic assistance to the Maldives. India’s ‘Neighborhood First policy’ guides its diplomatic strategy with countries in its immediate neighborhood, that is: Afghanistan, Bangladesh, Bhutan, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka. The Neighbourhood First policy emphasises expanding India’s trade and commerce relations with the neighbouring countries. In 2020, India provided a USD 100 million grant and a USD 400 million line of Credit (LoC) for the Greater Malé Connectivity Project. In 2021, India provided a USD 50€ million defence Line of Credit (LoC) for the development and maintenance of the Uthuru Thila Falhu (UTF) naval harbour. In August 2024, India financed and handed over water and sewerage infrastructure projects across 28 islands, built at a cost of approximately USD 110 million. Further, India provided emergency financial assistance by rolling over USD 100 million of Maldivian Treasury Bills and establishing a USD 400 million currency swap framework and an INR 3,000 crore currency swap. Additionally, India helped restore the water supply in Malé in 2014 through Operation Neer. During the COVID-19 pandemic, India ensured the steadfast delivery of vaccines under the Vaccine Maitri initiative.
Fourth, the bilateral trade. India was the second largest trade partner in 2022 and the largest in 2023. Bilateral trade value in 2022 amounted to USD 176.5 million. India exports essential commodities to the Maldives, such as engineering and industrial products like drugs and pharmaceuticals, radar apparatus, cement, and agricultural produce like rice, spices, and vegetables. Whereas, the Maldives exports scrap metals to India.
What does it mean?
First, bipartisan support for advancing India-Maldives relations. India continues to remain an indispensable partner for the Maldives. The fallouts from tensions in the bilateral relations had manifested the Maldivian government the risk of alienating a regional power like India. As a result, there is growing recognition among Maldivian politicians –including those who have previously opposed India’s presence and influence—about the imperative of maintaining cordial and stable relations with India for national interest and regional security.
Second, the implications of increased Indian presence in the Maldives. India’s contribution to enhancing housing, healthcare, and transport can help promote a positive attitude towards India among the Maldivian people. This legitimizes India’s positioning of being a ‘first responder’ to the country, ensuring people-centric development. India has helped strengthen the Maldives’ defence and maritime surveillance capabilities. While Maldives has sought to balance Indian and Chinese influences to maximise its autonomy, Maldives’ economic position and shared security goals with India in terms of counter-terrorism and the Indian Ocean Region necessitate a reliance on India.
About the author
Swati Sood is an Undergraduate student from the University of Delhi.
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