Why in news?
During Prime Minister Narendra Modi’s state visit to the Maldives in July 2025, India and the Maldives signed eight agreements. These deals covered digital payments, debt relief, fisheries, infrastructure projects and a large line of credit, signalling a reset in ties after recent political tensions.
Historical background
- The Maldives gained independence in 1965, and India was the first country to recognise it. The two countries have shared ethnic, cultural and commercial bonds for centuries.
- India came to the Maldives’ aid during the 1988 coup attempt (Operation Cactus) and again in crises such as the 2004 tsunami, the 2014 water shortage in Malé and during the COVID‑19 pandemic.
- Despite these ties, relations cooled after the “India Out” campaign, which criticised the presence of Indian personnel and projects. The recent visit marks a return to warmer cooperation.
Main agreements and outcomes
- Debt relief and credit: India has agreed to reduce the Maldives’ annual debt servicing burden by about 40 percent and offered a ₹4,850 crore line of credit for infrastructure projects.
- Digital connectivity: The integration of India’s UPI and RuPay systems with Maldivian payment platforms will enable cashless transactions in local currency and support tourism and trade.
- Fisheries and housing: Agreements include cooperation in fisheries management and the handover of 3,300 housing units financed by India in Hulhumalé.
- Security and humanitarian cooperation: India has gifted vehicles and defence equipment to the Maldivian armed forces and agreed to partner on disaster resilience and green energy.
- Economic engagement: Both sides have agreed to advance negotiations on a Bilateral Investment Treaty and a Free Trade Agreement, and to hold discussions on a broad range of infrastructure projects such as the Greater Malé Connectivity Project and the Hanimaadhoo Airport.
Significance and challenges
- The agreements reaffirm India’s role as the Maldives’ main development partner and first responder in crises, helping to counter narratives that portray Indian presence as threatening Maldivian sovereignty.
- The Maldives is strategically located in the Indian Ocean; cooperation is important for India’s Neighbourhood First and SAGAR policies and for preserving maritime security.
- India faces competition from Chinese economic influence in the Maldives. Maintaining goodwill requires timely completion of projects and sensitivity to local concerns about sovereignty and environmental impacts.
Way forward
- Deliver infrastructure projects on schedule and ensure they meet local needs.
- Institutionalise regular economic and security dialogues to manage geopolitical shifts in the Indian Ocean region.
- Deepen cooperation in climate resilience, education, health care and people‑to‑people exchanges to strengthen the partnership at the grassroots.