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Indian Express
3 days ago
- Business
- Indian Express
PM Modi's engagement with the Maldives shows India is playing the long game
Written by Aditya Gowdara Shivamurthy Prime Minister Narendra Modi was on a state visit to the Maldives from July 25 to 26. The visit comes against the backdrop of the President of the Maldives, Mohamed Muizzu, pushing for a recalibration with India. Driven by economic necessities, India's pragmatic outreach, and China's underwhelming support, he has moderated his 'India Out' policy and rhetoric and toned down his unconditional allegiance to China. Given the backdrop, the visit is a strong symbolic message of Delhi's persistent influence in the country. Besides, it has also laid the ground for New Delhi's long game in the Maldives. By pushing for economic and financial connectivity, especially with the Indian Rupee, and doubling down on political engagement, India is creating new leverage. During PM Modi's visit, both leaders reviewed the entire gamut of relations and agreed to strengthen the multifaceted relationship by implementing the Joint Vision Document. They also inaugurated several India-funded projects, including roads and drainage in Addu city, the Ministry of Defence building, and six High Impact Community Development Projects. India also handed over 72 vehicles for the Maldives National Defence Force, 2 BHISHM Health Cube sets, and 3,300 housing flats. Additionally, they signed four MoUs to further cooperation in pharmacopoeia, meteorology, fisheries, and digitalisation. Most importantly, both countries have signed four agreements on financial and economic connectivity, as the Maldives faces debt distress and declining foreign reserves. As of March 2025, the Maldives has a debt of $9.4 billion, of which nearly 60 per cent is in US Dollars. However, the government continues to struggle with low foreign reserves. Currently, it has a reserve of a mere $850 million, and this year alone, the government will have to service over $600 million, along with maintaining its imports. Next year, it will have to service over $1 billion. Maturing debts, specifically bonds (domestic and external) and Chinese loans, have continued to deplete foreign reserves. China's loans have declined from $613 million in 2021 to $473 million in 2025, and its sovereign guarantees have reduced to $567 million. This has left India as the largest bilateral creditor to the country, especially with loans, currency swaps, and credit lines (LOC) taken under the previous government now maturing. Debts from EXIM India have increased from $15 million in 2021 to $572 million, and the sovereign guarantee is at $608 million. To complicate matters, more than $800 million of Indian loans committed are yet to be disbursed. With a looming economic crisis and increasing Indian debts, India and the Maldives signed an amendatory agreement to close the previous LOC. This will be replaced by a Rupee-denominated LOC worth Rs 4,850 crore (equivalent to $565 million), reducing the Maldives' debt obligations by 40 per cent, from servicing $51 million to $29 million annually, and easing the pressure of depleting US Dollar reserves and overall debts. Another major agreement was the implementation agreement on Unified Payment Interface (UPI). This, together with the RuPay card introduced in October 2024, will boost direct transactions between countries. These developments build on the finalisation of the local currency settlement system. Henceforth, India and the Maldives can now trade and allow tourists, diaspora, and businesses to make cross-border payments in local currencies (Rupees and Rufiyaa) rather than in US Dollars. Both countries also finalised the terms of reference for the India-Maldives Free Trade Agreement (FTA) and formally commenced negotiations on the agreement. With the FTA reducing trade barriers and boosting trade, Indian commodities will become cheaper in the Maldives. India is one of the Maldives' largest trade partners. While their trade is worth $680 million, India exports goods worth $561 million. Earlier, the Maldives would have imported goods from India using US Dollars; they can now do the same with the Indian Rupee, which the Maldives can tap from the currency swap, credit line, and direct transactions. This will help ease pressure on the economy and reduce the outflow of the US Dollar. The FTA will also likely be complemented with a bilateral investment treaty, creating new economic leverage for India. Learning lessons from the past, India also doubled down on its engagements across party lines. During his visit, PM Modi met prominent figures from the ruling party, including those who played a crucial role in the 'India Out' campaign and are close to China. These engagements also included bilateral meetings with the President, the Vice President, and the Speaker of the parliament. Modi also held a meeting with prominent figures from the Jumhooree Party, Maldives National Party, and Maldives Development Alliance. Separate meetings were held with the main Opposition, the Maldivian Democratic Party, and former President Mohamed Nasheed. These engagements underline India's attempts at making relations non-partisan and resilient to turbulent domestic politics. PM Modi's latest visit to the Maldives shows that India is letting bygones be bygones, and is more optimistic about the future. There is confidence that the Maldives will understand that regional security is an issue of mutual interest. However, there are some problems. For India, the Maldives' economic stability remains a major challenge. On its part, Malé will continue to engage with Beijing to seek assistance and investments in order to diversify and not become over-reliant on India. Discussions of loan restructuring with China began in January 2024 and have shown little progress, further nudging Muizzu to engage with the country. India, therefore, should not let its guard down. The writer is an associate fellow with the Strategic Studies Programme's Neighbourhood Studies Initiative
United News of India
4 days ago
- Business
- United News of India
From 'India Out' to India In. India-Maldives ties come a long way with PM's visit to Male
Male/New Delhi, July 26 (UNI) From ''India Out'' to India In. India-Maldives relations have come a long way with Prime Minister Narendra Modi's State visit to the Indian Ocean island nation which concluded today. Prime Minister Modi who arrived in the Maldivian capital Male yesterday on a two-day State visit, was the Guest of Honour at Maldives 60th Independence Day marking a ''milestone'' in bilateral ties between the two countries, an official spokesman said. This year also marks 60 years of the establishment of diplomatic relations between the two countries. This is the first time that an Indian Prime Minister attended the Independence Day celebrations in Maldives. Prime Minister Modi is also the first foreign leader at the level of Head of State or Government to be hosted by President Muizzu. Ironically, President Muizzu had won the elections mainly on ''India Out'' campaign. His three Ministers had criticised Prime Minister Modi which resulted in a tailspin in relations between the two countries. The two leaders held discussions in a restricted format yesterday which were followed by delegation-level talks. The two countries signed three Agreements and four Memoranda of Understanding (MOUs) after the delegation-level talks including on initiating discussions on a Free Trade Agreement (FTA) between the two countries. India also extended a Rs 4850 crore Line of Credit to the Maldives which would be utilised to develop priority sectors including Defence, health and housing. Both leaders inaugurated the Maldives Defence Ministry building in male and released a postage stamp commemorating 60 years of establishment of di0plomattic relations between the two countries. President Muizzu who hosted a State Banquet in honour of Prime Minister Modi yesterday, described him as a ''wonderful person.'' ''He is a wonderful person who is very fond of building relationships between India's neighbours. The Maldives and India have a very good relationship that goes back centuries, and with PM Modi's leadership, cooperation between the two governments is going to be even more prosperous in the days ahead." Asked whether he would visit India this year, President Muizzu said "I hope so. I don't know whether this year or not, but maybe in the near future." On India's role in Maldives development he said "We all have seen how India has helped the Maldives in the past, and nobody will doubt how India will be a very crucial partner going forward." In a 'U' turn from his earlier stand of cozying up with China, President Muizzu said it is not his Government's policy to allow any foreign country take the lead in his affairs and every square inch of Maldives territory will be safeguarded by Maldivians. He was addressing the Maldives National Defence Force (MNDF) and the Maldives Police Service (MPS) on his country's 60th Independence Day. This is the first time in Maldives history that a Maldivian Head of State has addressed both forces at a joint ceremonial gathering. Referring to the vast maritime domain of the Maldives, he said that despite the country's relatively small population, it is Maldivians themselves who will bear the responsibility of defending and securing the nation's territory. "I extend heartfelt thanks to Prime Minister Narendra Modi for his State Visit to the Maldives. We held fruitful discussions, witnessed the exchange of four MoUs and three agreements in vital areas, and announced the launch of FTA negotiations." "Together, we celebrated the Maldives' 60th Independence Day, released a commemorative stamp marking 60 years of formal ties, and inaugurated key development projects under Indian assistance," President Muizzu said on X. UNI RB 2032
United News of India
5 days ago
- Politics
- United News of India
'Will Not allow any country take lead in Maldivian affairs' : Maldives President
Male/New Delhi, July 26 (UNI) Maldives President Mohamed Muizzu today asserted that it is not his Government's policy to allow any foreign country take the lead in his affairs and said that every square inch of the Indian Ocean island nation's territory will be safeguarded by Maldivians. He was addressing the Maldives National Defence Force (MNDF) and the Maldives Police Service (MPS) on his country's 60th Independence Day. This is the first time in Maldives history that a Maldivian Head of State has addressed both forces at a joint ceremonial gathering. Prime Minister Narendra Modi, on a two-day State visit to the Maldives, was the Guest of Honour at the celebrations. Highlighting the priority accorded by his Government to police and defence forces, President Muizzu said this focus has, at times, prompted questions regarding the rationale behind such emphasis. Referring to the vast maritime domain of the Maldives, he said that despite the country's relatively small population, it is Maldivians themselves who will bear the responsibility of defending and securing the nation's territory. He, however, acknowledged that the Maldives must rely on other nations for certain resources and technical expertise, and affirmed the Government's commitment to cooperating with international partners in this regard. The President also paid tribute to the national heroes whose sacrifices secured the nation's independence, emphasising that every Maldivian citizen should appreciate their legacy. He underscored the shared responsibility to preserve the nation's independence and security for the benefit of future generations. Reflecting on the Maldives' enduring history of independence, the President conveyed his profound gratitude to the national defence forces for their unwavering service in upholding the nation's sovereignty, particularly during the rare instances when that independence was challenged. He added that strengthening and developing the Maldives National Defence Force (MNDF) and the Maldives Police Service (MPS) shall remain the Government's utmost priority. UNI RB 1412
Mint
5 days ago
- Business
- Mint
‘Deep as ocean,' PM Modi calls Maldives India's ‘most trusted' friend, announces ₹4,850 cr line of credit
India and the Maldives on Friday exchanged eight key agreements covering a wide range of sectors, including Line of Credit, debt repayment, fisheries, digital transformation, and Unified Payments Interface (UPI), in the presence of Prime Minister Narendra Modi and Maldivian President Mohamed Muizzu. Modi's visit signals a significant improvement in India-Maldives relations after a period of tension. He also revealed that the two nations are moving forward with negotiations for a bilateral investment treaty and have already begun talks on a free trade agreement. 1. Prime Minister Narendra Modi emphasised that New Delhi is proud to be the "most trusted" friend of the Indian Ocean archipelago. 'For us, it is always friendship first,' Modi said in his media statement, adding the 'roots of our relations are older than history, and as deep as the ocean.' The Maldives holds an important place in India's "Neighbourhood First" policy and MAHASAGAR (Mutual and Holistic Advancement for Security and Growth Across Regions) vision, the prime minister said, as reported by PTI. 2. Prime Minister Narendra Modi on Friday announced that India is proud to be the Maldives' most trusted friend, following the announcement of a ₹ 4,850 crore line of credit to support the island nation. The two leaders witnessed the exchange of six MOUs in the fields of fisheries and aquaculture, meteorology, digital public infrastructure, UPI, Indian pharmacopoeia and concessional Line of Credit. 3. The new Line of Credit offers Rupees 4850 crores [ approx USD 550 million] in support of infrastructure development and other activities in Maldives. An Amendatory Agreement for the existing LoCs was also exchanged. It reduces Maldives's annual debt repayment obligations by 40% [from USD 51 million to 29 million]. Both sides also exchanged Terms of Reference of the proposed Free Trade Agreement. 4. The two leaders also virtually inaugurated a roads and drainage system project in Addu city and six High Impact Community Development Projects in other cities. Prime Minister handed over 3,300 social housing units and 72 vehicles for Maldives National Defence Force and the Immigration authorities. 5. Prime Minister also handed over two units of Aarogya Maitri Health Cube [BHISHM] sets to the Government of Maldives. With state-of-the-art medical equipment as part of the cube, it can provide medical aid to 200 casualties with in-built support to sustain a crew of six medical personnel for up to 72 hours. The recent improvement in India-Maldives relations is particularly notable given the initial strain under Maldivian President Mohamed Muizzu, who took office in November 2023 after campaigning on an "India Out" platform and is seen as having close ties to China. Tensions escalated quickly after Muizzu's inauguration, when he called for the withdrawal of Indian military personnel from the Maldives. In response, India replaced its military presence with civilian personnel to ease diplomatic friction. The Maldives remains one of India's key maritime partners in the Indian Ocean Region, and bilateral ties in defence and security had strengthened significantly under previous Maldivian administrations.
Mint
5 days ago
- Business
- Mint
‘Deep as ocean,' PM Modi calls Maldives India's ‘most trusted' friend, announces ₹4,850 cr line of credit
India and the Maldives on Friday exchanged eight key agreements covering a wide range of sectors, including Line of Credit, debt repayment, fisheries, digital transformation, and Unified Payments Interface (UPI), in the presence of Prime Minister Narendra Modi and Maldivian President Mohamed Muizzu. Modi's visit signals a significant improvement in India-Maldives relations after a period of tension. He also revealed that the two nations are moving forward with negotiations for a bilateral investment treaty and have already begun talks on a free trade agreement. 1. Prime Minister Narendra Modi emphasised that New Delhi is proud to be the "most trusted" friend of the Indian Ocean archipelago. 'For us, it is always friendship first,' Modi said in his media statement, adding the 'roots of our relations are older than history, and as deep as the ocean.' The Maldives holds an important place in India's "Neighbourhood First" policy and MAHASAGAR (Mutual and Holistic Advancement for Security and Growth Across Regions) vision, the prime minister said, as reported by PTI. 2. Prime Minister Narendra Modi on Friday announced that India is proud to be the Maldives' most trusted friend, following the announcement of a ₹ 4,850 crore line of credit to support the island nation. The two leaders witnessed the exchange of six MOUs in the fields of fisheries and aquaculture, meteorology, digital public infrastructure, UPI, Indian pharmacopoeia and concessional Line of Credit. 3. The new Line of Credit offers Rupees 4850 crores [ approx USD 550 million] in support of infrastructure development and other activities in Maldives. An Amendatory Agreement for the existing LoCs was also exchanged. It reduces Maldives's annual debt repayment obligations by 40% [from USD 51 million to 29 million]. Both sides also exchanged Terms of Reference of the proposed Free Trade Agreement. 4. The two leaders also virtually inaugurated a roads and drainage system project in Addu city and six High Impact Community Development Projects in other cities. Prime Minister handed over 3,300 social housing units and 72 vehicles for Maldives National Defence Force and the Immigration authorities. 5. Prime Minister also handed over two units of Aarogya Maitri Health Cube [BHISHM] sets to the Government of Maldives. With state-of-the-art medical equipment as part of the cube, it can provide medical aid to 200 casualties with in-built support to sustain a crew of six medical personnel for up to 72 hours. The recent improvement in India-Maldives relations is particularly notable given the initial strain under Maldivian President Mohamed Muizzu, who took office in November 2023 after campaigning on an "India Out" platform and is seen as having close ties to China. Tensions escalated quickly after Muizzu's inauguration, when he called for the withdrawal of Indian military personnel from the Maldives. In response, India replaced its military presence with civilian personnel to ease diplomatic friction. The Maldives remains one of India's key maritime partners in the Indian Ocean Region, and bilateral ties in defence and security had strengthened significantly under previous Maldivian administrations. (With inputs from agencies)
