India and the Maldives have significantly recalibrated their bilateral relationship, marked by Prime Minister Narendra Modi's visit to Male and the signing of eight key agreements. This visit, the first by a foreign leader since President Mohamed Muizzu assumed office in November 2023, signals a warming of relations after a period of strain. The agreements span various sectors, including finance, trade, fisheries, and digital connectivity, underscoring a comprehensive effort to strengthen cooperation.
A central component of this renewed partnership is India's commitment to bolstering the Maldivian economy. A Line of Credit (LoC) of ₹4,850 crore (approximately $565 million) has been extended to the Maldives to finance infrastructure and development projects aligned with the nation's priorities. This LoC is particularly noteworthy as it is denominated in Indian rupees, a first for India in its dealings with the Maldives. In addition to the LoC, India has agreed to ease the Maldives' annual debt repayment obligations on existing Indian lines of credit, providing further financial relief to the island nation. Foreign Secretary Vikram Misri stated that this would reduce obligations by almost 40%, from $51 million to $29 million.
Trade and investment ties are also set for a boost with the formal launch of negotiations for an India-Maldives Free Trade Agreement (FTA). Both countries have agreed on the Terms of Reference for the FTA, signaling a commitment to expediting the negotiation process. Furthermore, there is a move to finalize a bilateral investment protection agreement, which would encourage and protect investments between the two countries. Trade between the two nations has already seen significant growth, increasing from $300 million in 2021 to $548 million in 2023.
Cooperation in fisheries and aquaculture is another key area of focus. A Memorandum of Understanding (MoU) has been signed to enhance collaboration in sustainable tuna and deep-sea fisheries, aquaculture development, value chain improvement, and eco-tourism based on marine resources. The MoU includes a commitment to strengthening the fisheries sector through innovation, scientific research, and infrastructure development, including the upscaling of fish processing and cold storage capacities. Training and knowledge exchange programs will also be conducted to build capacity in areas such as aquatic animal health and aquaculture farm management. Over 16 million people in India, Sri Lanka, and the Maldives depend directly or indirectly on marine fisheries, fish farming, and inland fisheries as an economic activity.
Digital connectivity is also being enhanced through a network-to-network agreement between NPCI International and the Maldives Monetary Authority to enable India's Unified Payments Interface (UPI) in the island nation. Once the technical integration is completed, people will be able to use UPI in the Maldives, boosting tourism and retail trade. Additionally, a MoU has been signed on cooperation in the field of sharing successful digital solutions implemented at population scale for digital transformation.
Other agreements include a MoU on climate and environmental collaboration and an agreement on the recognition of the Indian Pharmacopoeia in the Maldives. These agreements reflect a broadening of cooperation into new domains and a commitment to addressing shared challenges.
Prime Minister Modi emphasized that India is proud to be the Maldives' most trusted friend and that the country holds a central place in India's Neighbourhood First policy and the MAHASAGAR vision for regional maritime cooperation. He also reiterated India's commitment to supporting the Maldives in strengthening its defense capabilities, noting that deepening security ties reflect the trust between the two nations. President Muizzu, while acknowledging India as the "closest, most-trusted ally", expressed his commitment to further strengthening cooperation with India across a broad range of sectors through high-level exchanges.
The visit also included the handover of 3,300 social housing units in Hulhumale under India's Buyer's Credit programme, aimed at easing urban housing shortages. Additionally, several India-backed projects were inaugurated, including a new defence ministry building in Male, roads and drainage systems in Addu city, and six High Impact Community Development Projects (HICDPs) across the Maldives.
