Prime Minister Narendra Modi attended the 60th Independence Day celebrations of Maldives on July 26th. PM Modi is the first head of state from India to attend the Independence Day of the island country. Also, Modi is the first foreign leader Maldivian President Muizzu is hosting since he ascended to power in 2023. This diplomatic move thus, is a clear diplomatic and strategic edge gained by India after a phase of frosty relations, thus earmarking a new chapter in the New Delhi-Male ties.
President Muizzu reiterated that India has helped Maldives in the past and nobody will doubt that India will be a very crucial partner in the future as well. He also expressed gratitude to the Indian government for its continued support and steadfast friendship. “Maldivian government is committed to building a dynamic economy and ensuring peace & security in the region. India’s partnership is crucial in realizing these ambitions”, Muizzu added. This geopolitical shift of the Maldivian government is a testament for India’s growing vitality in the Indian Ocean Region, either as a resilient economic partner or as a net security provider in order to ensure free, open and inclusive Indian Ocean domain.
A Diplomatic Kick-start to Strategic Initiatives
During Prime Minister’s visit to the island nation, both nations heralded a series of trade, infrastructure and defence-related agreements.
Initiating FTA Negotiations
On July 25th, New Delhi and Male announced the beginning of negotiations for an India-Maldives Free Trade Agreement(IMFTA). Down the lane, FTA would be a landmark agreement that facilitates easy, secure and exceptional maritime trade practices between both the Indian Ocean neighbours. This FTA would give India a diplomatic advantage not just in the Maldives but across the Indian Ocean Region in terms of trade, tourism and mobility.
A Massive Line of Credit to Maldives
During PM Modi’s visit, India signed an MoU to extend a line of credit(LoC) of Rs.4,850 crore to Maldives with the aim of supporting the developmental and infrastructural needs of the island nation. Another, testimonial feature is, for the maiden time, the line of credit is given to Maldives in the rupee denominated IndiZan currency instead of the dollar-denominated credit, unlike the earlier times. This shows the gradual spike in the use of rupee for the purpose of bilateral transactions, instead of dollar, which is also a sign of diplomatic leverage gained by India in bilateral economic and financial transactions.
India has also reduced the annual debt repayment obligation of Maldives on Government of India funded loans. This is a major reduction of burden on Maldives with respect to repayment of external debt. For India, this is a strategic move to build trusted and lasting partnership with Maldives.
Promoting Digitisation in Maldives
Network-to-network agreement has been signed between NPCI International Payment Limited(NIPL), India and Maldives Monetary Authority(MMA) to revolutionize UPI system in Maldives. The success saga of India’s UPI going global is thus continuing, with more than 7 countries embracing the digital transaction system. UPI is indeed a diplomatic and soft power tool of India.
Promoting the Defence Capabilities
India has also assisted the Maldives in boosting its defence capabilities. President Muizzu thanked India for rendering 72 vehicles and other critical equipments for the Maldivian Defence Forces. These defence related assistance not just helps India to boost enduring bilateral security ties with Maldives, but also helps to strengthen the security architecture of the Indian Ocean Region and to carve a secure, transparent and inclusive maritime domain.
Apart from these, India and Maldives have also signed MoU in the domain of fisheries and aquaculture and numerous other developmental & infrastructure projects. The Prime Minister’s visit, thus, helped India to gain momentum in the bilateral relations with a strategically and geopolitically vital maritime neighbour. It also raised the strategic stake of India as a credible, reliable and time-tested soft power in an era of extreme geopolitical upheavals and unpredictable global power politics.
Diplomatic Freeze to Diplomatic Fanfare
From 2023 to 2025, India-Maldives relations have come a long way. Both the nations have traditionally had exceptional bilateral bonhomie and India’s developmental assistance to the Island nation has always been consistent. However, in 2023, ‘India Out’ campaign was initiated mainly due to domestic political reasons. After a brief phase of diplomatic downturn, currently, India’s tricolor is flying high on the streets of Maldives during Prime Minister Modi’s visit in 2025. The diplomatic book of India and Maldives thus has witnessed a full circle.
India considers Maldives as a key strategic partner in the Indian Ocean security architecture due to the latter’s strategic location. Maldives is crucial for India in order to ensure an open, inclusive and secure Indian Ocean Region amidst all geopolitical unrest and global power dynamics. Thus, having a firm footprint in Maldives is imperative for India. For Maldives, India is extremely vital as a credible partner for all its developmental initiatives and economic needs. Maldives being an island nation, tourism is the major revenue source for the economy to thrive and the inflow of Indian tourists is vital in this direction. India is also vital for Maldives to overcome its debt burden and other economic struggles.
India’s Solid Assistance to Maldives
Recognizing the geopolitical importance, Maldives shifted its earlier rigid stance and indeed New Delhi welcomed the optimism shown. When Maldivian President Muizzu visited India in October 2024, India helped the island nation to cope up with its debt burden and fiscal deficit. New Delhi also signed a currency swap agreement with Maldives upto 2027 for a massive $750 million, to help the latter deal with its depleting forex reserves. In May 2025, India gave $50 million Treasury bill support to Maldives to boost the island nation’s foreign reserve and stabilize its economy. Most importantly, both the nations had released a ‘vision statement’ for comprehensive economic and maritime security partnership.
The latest visit of Prime Minister Modi to Maldives, thus, leads to a win-win situation for both the countries. Especially for India, the reset in India-Maldives relations is a demonstration for the country’s exceptional diplomatic skills and persistent efforts. It redefines India’s stature as a responsible and resilient bilateral partner in the geopolitical chessboard, in an era of spiralling geopolitical hustles. Ultimately, smooth relations with Maldives gives India a strategic key and secure footprint in the highly ambitious and much contested Indian Ocean region, thus helps India to maintain collective security and balance of power in the region.
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