India and Maldives have revitalised their bilateral relationship, marked by Indian Prime Minister Narendra Modi's visit to the Maldives and the announcement of a fresh $565 million line of credit (LoC) for the island nation.

This credit line, denominated in Indian rupees (approximately Rs 4,850 crore), is intended for priority infrastructure and development projects in key sectors such as defense, healthcare, education, housing, and sports, reflecting the development priorities of the Maldivian government under President Mohamed Muizzu.

The visit, coinciding with the 60th anniversary of Maldivian independence and diplomatic ties with India, included signing several agreements, including one to reduce Maldives' annual debt repayment burden on Indian loans by 40%, bringing it down from about $51 million to $29 million annually.

This financial support complements earlier assistance, including a $400 million US dollar currency swap and other economic aid measures provided to help Maldives manage liquidity challenges.

India and Maldives also reaffirmed their commitment to deepening economic cooperation through negotiations on a bilateral investment treaty and a free trade agreement (FTA). Discussions on these trade agreements have been officially initiated with an aim to transition “from paperwork to prosperity,” facilitating smoother trade and investment flows between the two countries.

The visit also emphasised security and defense cooperation. Modi inaugurated a new defense ministry building in the Maldives, which was constructed with Indian assistance. India pledged continued support to strengthen Maldives' defense capabilities, demonstrating renewed strategic partnership in the Indian Ocean region amid concerns about China's influence.

Despite a difficult start to Muizzu’s presidency, including an earlier removal of Indian military personnel and some pro-China positioning, relations have improved significantly.

Muizzu made clear his commitment to not harm India's security interests, and both leaders launched a Comprehensive Economic and Maritime Security Partnership to resuscitate ties. Modi described India as Maldives' “most reliable partner” and reiterated the long-standing, deep relationship between the two countries.

In summary, the key outcomes of PM Modi's 2025 visit to the Maldives include:

Announcing a $565 million line of credit for infrastructure and development projects.
Signing an agreement to reduce the Maldives’ debt repayment burden to India by 40%.
Commencing formal talks on a bilateral investment treaty and a free trade agreement.
Reinforcing defense and security cooperation with infrastructure support and capacity building.
Renewing strategic partnership underpinned by shared commitments to regional stability.

These efforts symbolise a comprehensive reset and strengthening of India-Maldives relations after earlier strains, with a focus on economic growth, security, and deeper integration.

Based On TOI Report