The Maldives and India have revitalized their relationship, with India pledging a $565 million (MVR 8.7 billion or ₹4,850 crore) line of credit and initiating discussions for a free trade agreement (FTA). The agreements were made during Indian Prime Minister Narendra Modi's visit to the Maldives at the invitation of President Mohamed Muizzu.
Financial Assistance and Debt Relief
The $565 million line of credit from the Export-Import Bank of India is intended to support infrastructure development projects in the Maldives. This line of credit is the first extended to the Maldives that is denominated in Indian rupees, replacing the previous dollar-denominated credit. In addition to the new credit line, an agreement was signed to ease the annual repayment terms of existing credit lines granted by India, reducing the Maldives' debt repayment burden by 40%.
Free Trade Agreement
The commencement of formal negotiations for a Free Trade Agreement (FTA) between the Maldives and India marks a significant step in strengthening their economic partnership. Trade between the two countries has seen substantial growth, increasing from $300 million in 2021 to $548 million in 2023. The terms of reference for the FTA have been finalized, signaling a commitment to closer economic ties.
Bilateral Agreements
In addition to the credit line and FTA discussions, several other agreements and Memorandums of Understanding (MoUs) were signed, covering various areas of cooperation:
Commitment to Partnership
Both leaders emphasized their commitment to strengthening the bilateral relationship and enhancing cooperation in various sectors. President Muizzu announced the initiation of negotiations for the FTA during a joint press conference with Prime Minister Modi, highlighting the importance of this initiative in strengthening the economic partnership. Prime Minister Modi affirmed India's commitment to supporting the Maldives' development needs and strengthening its defense capabilities. He also emphasized India's role as the "first responder" for the Maldives, underscoring the importance of peace, stability, and prosperity in the Indian Ocean region.
The agreements and discussions signify a renewed commitment to strengthening ties between the two nations, focusing on economic development, security cooperation, and regional stability.
