Indian Prime Minister Narendra Modi announced a significant $565 million line of credit to the Maldives on Friday, July 25, 2025, during a landmark visit to the Indian Ocean archipelago. This announcement coincided with the launch of formal talks for a free trade agreement between the two nations, marking a pivotal step in deepening economic and strategic ties.
Modi's two-day visit to the Maldives, which began on Friday, was timed to commemorate the 60th anniversary of the island nation’s independence from British rule and the establishment of diplomatic relations between India and the Maldives. The announcement came during a joint media statement with Maldivian President Mohamed Muizzu, who has been in office since 2023.
The $565 million credit line is earmarked for infrastructure and development projects aligned with the priorities of the Maldivian people. Modi emphasized the strategic importance of the Maldives to India, stating, “India is Maldives’ closest neighbor. Maldives holds an important place in both India’s neighborhood-first policy and ocean vision.” He further underscored India’s commitment by declaring, “India is also proud to be Maldives’ most trusted friend.”
Alongside the credit line announcement, Modi witnessed the exchange of agreements to enhance cooperation in sectors such as fisheries, health, tourism, and digital development. In a gesture reinforcing security ties, he formally handed over dozens of heavy vehicles to the Maldives’ defense forces. Modi reiterated India’s pledge to continue supporting the Maldives in strengthening its defense capabilities, highlighting peace, stability, and prosperity in the Indian Ocean as common goals.
The visit also saw discussions on finalizing a bilateral investment treaty and initiating formal negotiations for a free trade agreement, signaling a broadening of economic collaboration. President Muizzu expressed his commitment to deepening cooperation across multiple sectors including tourism, healthcare, and housing. “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,” Muizzu said.
This visit marks a notable turnaround in India-Maldives relations, which had experienced tension following Muizzu’s election in 2023. The president had campaigned on an anti-India platform, pledging to end the Maldives’ “India first” policy and strengthen ties with China. Early in his term, Muizzu demanded the withdrawal of Indian military personnel stationed in the Maldives, who had been assisting with humanitarian and rescue operations. India responded by replacing these soldiers with civilian experts in 2024.
Muizzu’s initial outreach to China, including a visit in January 2024 before visiting India, further strained relations. The Maldives had joined China’s Belt and Road Initiative back in 2013, seeking infrastructure development and expanded trade. However, economic challenges, including a struggling tourism sector critical to the $7.5 billion Maldivian economy, led the island nation to seek financial support from both China and India.
India played a crucial role in preventing the Maldives from defaulting on its debt, providing financial assistance such as a $100 million treasury bills rollover and a $400 million currency swap agreement during Muizzu’s visit to India in October 2024. Since then, relations have warmed considerably. Muizzu has toned down his anti-India rhetoric and met with Modi twice last year in New Delhi, with both leaders pledging to open a “new chapter” in bilateral ties.
Modi’s visit was met with a warm welcome in Male, the Maldivian capital, where he was greeted by President Muizzu and several top ministers at Velena International Airport. A colorful ceremonial welcome and guard of honor took place at the iconic Republic Square, reflecting the significance the Maldives places on the renewed partnership.
In addition to the credit line and trade talks, Modi is set to remotely inaugurate an expansion of the international airport on Hanimaadhoo island, a project India is helping to finance. This infrastructure upgrade is expected to bolster connectivity and tourism, vital sectors for the Maldives’ economic recovery and growth.
President Muizzu highlighted the multifaceted nature of India’s assistance, stating, “India’s continued assistance to the Maldives through the export of essential commodities is a key facet of our bilateral cooperation.” He also noted that the credit line would be used not only to strengthen security forces but also to improve healthcare, housing, and education.
The strategic importance of the Maldives in the Indian Ocean region cannot be overstated. It serves as a critical maritime neighbor for India and a key node in the competition for influence between India and China. Modi’s visit and the substantial credit line signal India’s determination to maintain and expand its influence in the region.
As Modi prepares to depart on Saturday, July 26, 2025, he will attend the Maldives’ 60th Independence Day celebrations, a symbolic endorsement of the enduring ties between the two nations. This visit and the agreements signed therein mark a new era of cooperation, with India positioned as a steadfast partner in the Maldives’ development and security.
The reset in relations after a period of diplomatic chill reflects the pragmatism of both countries in the face of regional geopolitical dynamics and economic imperatives. With the Maldives balancing its ties between two regional giants, India’s proactive engagement through financial support, defense cooperation, and trade negotiations underscores its commitment to being the Maldives’ most trusted friend.
