India’s Pivotal Role in the Maldives’ Economic Stability

Former Maldives President Mohamed Nasheed has openly credited India with helping the Maldives avoid a potentially disastrous economic default during one of the most severe financial crises in the country’s recent history. As the Maldives faced mounting external debt and a looming threat of economic collapse, Nasheed remarked, “If not for India, we would have gone default,” emphasising the critical and timely nature of India’s financial interventions.

India’s assistance—including currency swaps, a $50 million Treasury Bill rollover, and broader emergency financial packages—provided essential liquidity and boosted the Maldives’ foreign exchange reserves, preventing an imminent default and stabilising the island nation’s economy. Indian support has not only helped the Maldives meet substantial debt repayment obligations but also preserved its economic sovereignty during a period of acute financial stress.

Nasheed highlighted that the India-Maldives relationship transcends mere financial aid. He described it as a partnership built on “trust and regional solidarity,” which has reinforced resilience and deepened bilateral ties between the two nations during trying times. This relationship, according to Nasheed, is not just transactional—it establishes a foundation for enduring prosperity and stability in the Indian Ocean region.

The Maldives has maintained an “India-first” foreign policy, though Nasheed noted that domestic political cycles sometimes led to oscillations between closer ties with India or China. With the entrenchment of democracy, however, Maldivian foreign policy has become more stable and consistently pro-India, reflecting a broad political consensus.

Prime Minister Narendra Modi’s visit from July 25-26, 2025, to attend the Maldives’ 60th Independence Day as guest of honour, is seen as a reaffirmation of India’s strategic interest in the archipelago. Given the Maldives’ vital geographic location in the Indian Ocean, PM Modi’s trip underscores India’s commitment to maintaining peace, security, and prosperity in the region.

Defence cooperation remains a cornerstone of India-Maldives relations. Nasheed underscored the “essential” nature of robust security partnerships, with both countries collaborating on maritime security, disaster response, and environmental protection. This cooperation contributes to regional stability and ensures the safety of key sea lanes in the Indian Ocean, further enhancing mutual trust and strategic depth.

Nasheed hailed India’s rapid GDP growth, noting that India’s prosperity is shared with its neighbours and benefits the wider region. The Maldives has been a significant beneficiary of India’s “Neighbourhood First” policy, which fosters deep economic integration and opens up opportunities for trade, tourism, and investment.

Tourist arrivals from India to the Maldives have notably increased, with the strength of bilateral relations reflected in the rapid growth of Indian visitors to Maldivian resorts. Major infrastructure projects such as the Hanimadu Airport, funded by Indian credit and nearing completion, are set to further boost connectivity and tourism between southern India and northern Maldives.

Nasheed advocated for a structured, mutually beneficial trade agreement, particularly in light of robust demand for Maldivian fish in Indian markets. Such an agreement would bring predictability, diversify market access, and create new pathways for cooperation in logistics, shipping, and sustainable marine practices.

He emphasised that economic integration should be viewed as a catalyst for shared growth, food security, and deeper bilateral trust—aligning closely with India’s regional vision and the Maldives’ national development goals.

PM Modi’s upcoming visit marks a significant reset and enhancement of India-Maldives relations, which had experienced strain in recent years due to external geopolitical shifts. Talks with President Mohamed Muizzu are expected to strengthen the India-Maldives Joint Vision for a Comprehensive Economic and Maritime Security Partnership, ensuring both nations remain aligned on development, security, and regional cooperation.

Nasheed’s unequivocal praise for India’s role serves as testimony to the importance of timely and trusted partnerships in international diplomacy—particularly for small, vulnerable economies like the Maldives facing global financial headwinds. The current trajectory of India-Maldives relations suggests increasing alignment on foreign policy, security, and economic integration, with Indian support playing a foundational role in the Maldives’ continued stability and growth.

Based On ANI Report