‘India in’: Modi’s visit, aid pledge reshape Maldives ties as China wavers

India’s willingness to support the Maldives through its economic woes has helped shift Male’s stance to one of cooperation, analysts say

Indian Prime Minister Narendra Modi’s recent visit to the Maldives is being viewed as a symbolic yet strategic reset in bilateral ties, signalling New Delhi’s renewed engagement with its island neighbour amid waning Chinese investment and mounting economic distress in Male.

Modi’s two-day trip, which coincided with the Maldives’ 60th Independence Day celebrations, marked his first visit since President Mohamed Muizzu took office in late 2023 following an election campaign built on a combative “India Out” platform.

Aditya Gowdara Shivamurthy, an associate fellow at the Delhi-based Observer Research Foundation’s strategic studies programme, said Modi’s visit was successful for two key reasons – to show that Indian influence remained unchallenged in the Maldives, and to aid the local government amid the country’s economic struggles.

The pledge of assistance underscored India’s willingness, commitment and interest to support the Maldives when others were hesitating, Shivamurthy told This Week in Asia.

During the visit, Modi announced a US$565 million credit line and launched free-trade talks with the Maldives. India also announced a reduction in repayments of an earlier credit line from US$51 million to US$29 million annually.

“Whatever the weather may be … our friendship will always remain bright and clear. India will continue to support the development of the Maldives’ defence capabilities,” Modi said during a joint press conference, while Muizzu reflected on the successes of the shared developmental journey between the two countries.

India also said it would gift 72 heavy vehicles to the Maldivian defence ministry.

The improvement in bilateral ties is a contrast to Muizzu’s anti-India rhetoric during the 2023 election and Maldivian officials making derogatory remarks about Modi, signalling a shift in the geopolitical dynamics of the Global South.

Shivamurthy said the Maldives had moved from confrontation to cooperation for various reasons, including domestic politics, economic issues at home and China’s scant interest. India’s accommodative engagement also led to this recalibration, he added.

“This is now reinforced and reciprocated by India through Modi’s visit,” Shivamurthy said.

Muizzu was considered more inclined towards China and made his first state visit to Beijing in January 2024, where he signed 20 key agreements with his Chinese counterpart. Two months later, the Maldives and China signed a military assistance agreement.

China has increasingly invested in the Maldives under its Belt and Road Initiative. The investments, which include the China-Maldives Friendship Bridge and airport upgrades, have totalled about US$1.4 billion.

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Shivamurthy said while China was not losing its grip on the Maldives, it was hesitant to invest in the country.

“Lack of confidence in Muizzu and the economic situation has left China in a tricky situation. This is reinforced by its role in [the] Sri Lanka crisis. So China has been lying low – it is investing in small projects through grants and not mega infrastructure projects and loans,” Shivamurthy said.

Experts believe the economic distress and diplomatic outreach by India appear to have reshaped the Maldives’ stance.

Nilanthi Samaranayake, an adjunct fellow at the East-West Centre in Washington, said senior officials from both the Maldives and India successfully crafted a compromise solution that satisfied both countries’ paramount interests: the Maldives wanted foreign military troops out, while India wanted continued maritime surveillance.

Operation of aircraft by Indian civilians was the solution acceptable to both sides, she said.

Earlier this month, Foreign Secretary Vikram Misri attributed the turnaround in the relationship to India’s hard work on ties with the island nation.

Samaranayake said the relationship was visibly reset last year when Muizzu was invited to visit India for Modi’s swearing-in ceremony and was seated next to him at a leaders’ banquet.

“Muizzu also conducted a state visit in October. Now Modi’s state visit cements a year of improved bilateral relations, especially after they sank following Muizzu’s inauguration,” she said.

During his visit, Modi also inaugurated several India-funded infrastructure projects, including a new defence ministry headquarters, new roads and a 4,000-unit housing scheme.

Modi’s trip also marked the launch of the network-to-network agreement between India’s NPCI International Payment Limited and the Maldives Monetary Authority on UPI (Unified Payments Interface) in the archipelagic nation.

Samaranayake said Muizzu assigned greater responsibility of securing Maldivian territory and waters to Maldivian defence forces rather than to foreign military.

“Unfortunately for bilateral relations, the thinking behind this approach was lost amid headline-generating controversies like his ministers’ inappropriate social media comments about Modi,” she said.

Samaranayake noted that Muizzu had expressed his intention since taking office to boost cooperation with India, but his foreign policy approach of seeking more partners for the Maldives was “misinterpreted” when compared to the previous administration’s focus on India.

She expected the Maldives under Muizzu to continue having standard military engagement with various partners, including China, as seen in other smaller South Asian countries.

Dr Vinitha Revi, an independent scholar of international relations, said Muizzu had been signalling a reset in bilateral relations since early 2024, when he called India “the Maldives’ closest ally”.

“India-Maldives reset has been in the works for some time now through the high-level core group meetings, joint dosti exercises, India’s budgetary support, and engagement in the form of official visits such as Foreign Minister Moosa Zameer’s visit to Delhi [in May 2024],” Revi said.

In its budget earlier this year, India allocated 6 billion rupees (US$69 million) to the Maldives, up from 4.7 billion rupees last year – the biggest increase among South Asian recipients.

Bilateral trade also rose to US$978.53 million in 2023-24 from about US$973.37 million in 2022-23.

Revi said India-Maldives relations must be viewed through a wider lens, instead of dwelling on comparisons to China’s presence in the archipelago.

“While the Maldives will continue to balance its ties between India and China, it is important to recognise that there are other major players actively seeking deeper ties with this island nation,” Revi said, citing US Secretary of State Marco Rubio’s message that Washington was keen to “deepen cooperation in the coming year with the Maldives”.

On the strategic front, Revi said India would need to watch out for its security red lines while bearing in mind three key factors: how the Maldives would balance defence cooperation with China and the US; Turkey’s intended role in the equation; and how collaboration between India, the Maldives and Sri Lanka could be strengthened to ensure security and stability in the larger Indian Ocean Region.

“On the development front, India needs to sustain its engagement by addressing debt relief, youth unemployment, climate change and, crucially, capacity building,” Revi said.