Prime Minister Narendra Modi announced a Rs 4,850 crore ($565 million) Line of Credit (LoC) to the Maldives today during his two-day state visit, reinforcing India’s role as the island nation’s “most trusted friend.” The announcement, made after comprehensive talks with President Mohamed Muizzu, also included the launch of India-Maldives Free Trade Agreement (FTA) negotiations and plans for a bilateral investment treaty, marking a significant thaw in ties strained since Muizzu’s “India Out” campaign brought him to power in November 2023.

Modi, welcomed by Muizzu at Velana International Airport and honored at Republic Square, emphasized India’s “Neighbourhood First” policy and MAHASAGAR vision for regional security and growth. The LoC will fund priority infrastructure projects, while an amendatory debt agreement reduces Maldives’ repayment obligations on prior Indian LoCs, easing its fiscal crisis with foreign reserves at $440 million. Eight MoUs were signed, covering fisheries, meteorological science, digital infrastructure, and defense capacity building.

The visit, coinciding with Maldives’ 60th Independence Day and 60 years of diplomatic ties, saw Modi inaugurate projects like 3,300 housing units in Hulhumale, road and drainage systems in Addu, and six community development initiatives. India also provided 72 heavy vehicles to the Maldivian defense ministry.

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Ties had soured after Muizzu demanded the withdrawal of Indian military personnel operating rescue aircraft, replaced by civilians in 2024. India’s sustained aid, including a $400 million currency swap and Rs 3,000 crore facility in October 2024, has helped rebuild trust. The FTA aims to boost bilateral trade from $56 billion, while enhanced defense cooperation underscores India’s strategic interest in the Indian Ocean Region amid China’s growing influence.

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