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‘Most trusted friend’: India unveils new measures to bolster Maldives economy
PM Modi and President Mohamed Muizzu alluded to the transformation in the relationship after the strains that beset it in recent years
EW DELHI: India on Friday unveiled new measures to bolster the economy of the Maldives, including a rupee-denominated credit line of ₹4,850 crore and a reduction in annual debt repayment obligations, with Prime Minister Narendra Modi asserting that New Delhi is the most trusted friend of the Indian Ocean archipelago.
On his arrival in the Maldives earlier in the day, Modi was received at the airport by President Mohamed Muizzu and key members of his cabinet. The visit marked another step in the turnaround of bilateral ties, which were hit when Muizzu came to power in late 2023 on an “India Out” campaign and sought to move the Maldives closer to China.
During talks between Modi and Muizzu, the two sides agreed to launch negotiations for a free trade agreement (FTA) and finalise a bilateral investment treaty. There was also understanding on closer defence and maritime security cooperation, with Modi describing peace, stability and prosperity in the Indian Ocean as a common goal.
At a joint media interaction after their discussions, Modi and Muizzu alluded to the transformation in the relationship after the strains that beset it in recent years. They also discussed plans to deepen economic and development cooperation, with the Maldives being one of the primary beneficiaries of India’s assistance in the region.
“India is the closest neighbour of the Maldives. The Maldives holds an important place in both India’s Neighbourhood First policy and MAHASAGAR vision. India is also proud to be the most trusted friend of the Maldives,” Modi said, speaking in Hindi. “Be it a disaster or a pandemic, India has always stood by as a first responder…For us, it is always friendship first.”
Muizzu described the launch of talks on an FTA as a significant step in strengthening the economic partnership, and said: “We appreciate the pivotal role played by India in supporting the Maldives to manage economic and liquidity challenges through a $400-million currency swap facility and interest-free one-year rollover of the treasury bill in May 2025.”
He added, “Looking ahead, we are fully committed to further strengthen our cooperation with India across a broad range of sectors through exchange of high-level visits.”
The two sides finalised seven agreements, including the pact for the credit line of ₹4,850 crore ($565 million) that Muizzu said will be used for priority projects in defence, healthcare, education and housing, and an agreement on reducing the annual debt repayment obligations of the Maldives towards Indian credit lines in US dollars. The obligations will be reduced by almost 40% from $51 million to $29 million.
In addition to an agreement between India’s NPCI International Payment Limited and the Maldives Monetary Authority to take forward the implementation of the Unified Payment Interface (UPI), the two sides finalised memorandums of understanding (MoUs) on cooperation in fisheries, cooperation between the Indian Institute of Tropical Meteorology and the Maldives Meteorological Services, cooperation in sharing India’s large-scale digital solutions, and recognition of Indian pharmacopoeia by the Maldives to facilitate the sourcing of medicines.
Modi and Muizzu inaugurated the new building of the Maldivian defence ministry built with Indian aid, and the Indian side handed over 72 vehicles and other equipment for the Maldivian defence forces.
The Indian side also handed over 3,300 out of 4,000 housing units financed under an Exim Bank credit line, and the two leaders inaugurated a network of roads and drainage systems built in Addu city with another Exim Bank credit line. Six high-impact community projects and a fish processing plant built with Indian support were also inaugurated.
Modi and Muizzu, during their talks, explored new avenues for cooperation under the Joint Vision for Comprehensive Economic and Maritime Security Partnership that was adopted during the Maldivian leader’s visit to India last October.
“Now [the joint vision] is becoming a reality and as a result, our relations are touching new heights,” Modi said. Muizzu spoke of a shared development journey and said the two sides had charted a “clear path for future cooperation”.
“Mutual cooperation in the field of defence and security is a symbol of mutual trust. The building of the defence ministry, which is being inaugurated today, is a concrete building of trust. It is a symbol of our strong partnership,” Modi added.
Noting that India will continue backing the Maldives in developing its defence capabilities, Modi said: “Peace, stability and prosperity in the Indian Ocean region is our common goal. Together at the Colombo Security Conclave, we will strengthen regional maritime security.”
A local currency system for settlement of trade will bolster trade in Indian rupees and the Maldivian rufiyaa, and the promotion of UPI in the Maldives will boost tourism and retail trade, Modi said. Muizzu said India continues to be a key source market for Maldivian tourism, and the two sides discussed ways to expand this key sector through enhanced connectivity, including direct flights.
When foreign secretary Vikram Misri was asked at a media briefing whether China’s role in the region figured in the talks between the two leaders, he said: “We proceed on the assumption that security is an issue of mutual interest. [Muizzu] expressed his commitment to the importance that the Maldives attaches to security-related issues and the commitment for the two sides to continue to work together.”
The contacts between the security forces of the two sides, including exchanges, training, and exercises, continue to be an important issue. “We continue to work very closely together with the Maldives on any issues that might impinge on not just our security, but our common security in this region,” Misri said.
Misri attributed the turnaround in bilateral ties to the way in which India and the Maldives have addressed “issues in the relationship” and paid attention to each other’s concerns. “This is a very close relationship, it has a basis that goes back a long way. There may be instances or events…from time to time but there is a fundamental understanding between the two sides…on the importance…of this relationship,” he said.
When Maldivian journalists raised the issue of remarks critical of the Indian PM that former Maldivian ministers had previously made, Misri said: “Our ties are strong enough to withstand some of these passing… remarks that have been made… I would, rather than look back, prefer to look forward and look into the future…That future is undoubtedly and unquestionably bright.”
On Saturday, Modi will be the guest of honour at celebrations marking the 60th anniversary of the independence of the Maldives and interact with Maldivian political leaders and the Indian community.
