India and the Maldives are significantly strengthening their strategic partnership through a series of major economic and defense agreements in July 2025. This marks a notable turnaround in bilateral relations after a period of strain.

Prime Minister Narendra Modi's visit to the Maldives, his first since President Mohamed Muizzu assumed office in November 2023, underscores this renewed commitment. The visit coincides with the Maldives' 60th Independence Day celebrations, where Modi is attending as the guest of honor. This also marks 60 years of diplomatic relations between the two countries, with India having been among the first to recognize the Maldives after its independence in 1965.

Economic Cooperation

A key highlight of the strengthened ties is the announcement of a ₹4,850 crore (approximately $565 million) line of credit from India to the Maldives. This credit line will be used to finance infrastructure and development projects in the Maldives. This line of credit is denominated in Indian rupees, marking the first such rupee-denominated LoC extended by India to the Maldives.

In addition to the line of credit, the two countries have agreed to begin negotiations for a Free Trade Agreement (FTA). The goal is to quickly conclude the India-Maldives FTA. They will also move forward with finalizing a bilateral investment treaty. These initiatives aim to boost economic cooperation and trade between the two nations.

India has also agreed to reduce the Maldives' annual debt repayment obligations towards Indian credit lines by almost 40%, from $51 million to $29 million. Further support came in May 2025, when India extended a $50 million treasury bill to help the Maldives boost its foreign reserves and stabilize its economy. The Maldives also appreciates the pivotal role played by India in supporting them to manage economic and liquidity challenges through a $400-million currency swap facility and interest-free one-year rollover of the treasury bill in May 2025.

Other agreements include cooperation in fisheries and aquaculture, sharing of India's population-scale digital solutions, recognition of the Indian Pharmacopoeia in the Maldives, and a network-to-network pact for enabling UPI in the Maldives. The launch of India's Unified Payments Interface (UPI) services in the Maldives is expected to deepen financial connectivity.

Defense Cooperation

Deepening security ties reflect the mutual trust between India and the Maldives. India has pledged to always stand by the Maldives in strengthening its defense capabilities. Mutual cooperation in the field of defense and security is a testament to this trust.

As a symbol of this strong partnership, Modi and Muizzu jointly inaugurated the new building of the Maldivian Ministry of Defence, which was constructed with Indian aid. India also handed over 72 vehicles and other equipment for the Maldivian defense forces.

Both sides have reaffirmed that peace and stability in the Indian Ocean are shared responsibilities. They will work together at the Colombo Security Conclave to strengthen regional maritime security. India has also remained a steady partner in enhancing the Maldives' maritime capabilities by assisting with coastal radar systems, naval training, and surveillance.

Strategic Alignment

This renewed partnership reflects a pragmatic reset of ties, guided by strategic priorities. The Maldives holds an important place in India's "Neighbourhood First" policy and its MAHASAGAR vision for regional maritime cooperation. Given the Maldives' strategic position along vital international shipping routes, its stability and collaboration are essential to India's maritime interests. Only about 70 nautical miles separate India's southernmost islands from the northern Maldives, making the island nation a key element in India's maritime security in the southern Indian Ocean.