Prime Minister Narendra Modi on Friday declared that India was Maldives' closest neighbour, lauding the bilateral relations between the two countries, which has seen significant improvement since President Mohamed Muizzu's 'India Out' campaign a year ago.
“For us, it is always friendship first,” Modi said, at his address on the 60th anniversary of bilateral relations with the Republic of Maldives.
Following this, New Delhi extended a credit line of $565 million (₹4,850 crores) to Male, and also reduced the annual debt repayment obligations of the Maldives towards India-funded lines of credit.
In addition to this, the two nations have also begun negotiations for a Free Trade Agreement (FTA), which symbolises a broader thaw in bilateral ties.
Why now?
The reason for this warmth towards India can be attributed to Maldives' economy, which has been strained by burgeoning inflation and debt repayments.
The Republic reportedly owes approximately $600 million in Sukuk (Islamic law-compliant) bonds, in addition to $1 billion due in 2026—all while public debt shot over 134 per cent of the country's GDP, as per a Frontline report.
In his October 2024 visit to India, Muizzu sought financial aid. Despite his anti-India rhetoric in 2023, India provided a currency swap for about $750 million and rolled over $50 million in credit.
The new credit line extension is a step further, which can significantly assist Maldives with its debt repayments. While it has not distanced itself from China—with whom Muizzu was originally aligned during his candidacy in 2023—the Maldives attempts to reduce its overdependence on China by means of improving bilateral relations with India.
Muizzu’s warm reception of Modi—breaking with long-standing protocol—is a powerful signal that his administration is pragmatically resetting the narrative, with oppositional voices such as former foreign minister Abdulla Shahid lauding this shift.
"Whenever anything urgent and distressful happens in Maldives, India has never let us down," he declared.