Chill to Warmth: The Defining Reset in India-Maldives Ties
Explore the transformation of India-Maldives relations as Prime Minister Narendra Modi's visit marks a significant reset in diplomatic ties, paving the way for economic growth and regional stability.
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| PM Modi attended the Maldives' 60th I-Day celebrations alongside President Muizzu. (PTI) |
A Historic Turning Point in India-Maldives Relations Following Modi’s Landmark Visit
A Landmark July Visit
When Prime Minister Narendra Modi touched down in Malé on July 25, 2025, to attend the Maldives’ 60th Independence Day as the guest of honour, it marked the first time an Indian premier had been accorded this role. His presence at Republic Square—the heart of the celebrations—was both symbolic and substantive, signalling a clear turn in relations that had grown frosty over the past 20 months.
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| Indian Tourists build the Maldives' Economy |
From Strain to Engagement
Tensions flared soon after Mohamed Muizzu assumed the Maldivian presidency in November 2023 on an “India Out” ticket, a political platform that advocated for reducing Indian influence in the Maldives. Within hours of his oath, he demanded the withdrawal of Indian military personnel operating Indian-gifted aviation assets—an abrupt halt to defence cooperation and a stark challenge to New Delhi’s regional influence.
Pragmatic Diplomacy in Action
Instead of escalation, India opted for pragmatism. By May 2024, New Delhi replaced its uniformed troops with civilian technical staff to continue key humanitarian and maritime surveillance missions. This compromise preserved critical capabilities while respecting Maldivian sovereignty.
Cushioning Economic Hardship
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| Several film stars had boycotted the Maldives earlier |
The diplomatic chill had an immediate economic impact. Indian tourists—who once made up a significant share of arrivals—shifted their bookings to rival destinations, such as Lakshadweep, after 2024 social media flare-ups, which were instances of anti-India sentiment expressed on social media platforms, deepening the Maldives’ liquidity crunch. In response, India extended:
- a new INR 4,850 crore (USD 565 million) rupee-denominated Line of Credit to fund infrastructure priorities
- a 40 per cent cut in annual repayments on an earlier USD 800 million credit line, reducing the burden from USD 51 million to USD 29 million
- four MoUs and three sectoral agreements spanning fisheries, tourism, digital governance, environment and aquaculture
These measures helped stabilise the Maldivian economy as its tourism-dependent revenues slid.
China’s Unmet Expectations
Beijing’s overtures to Male—ranging from tourism promotion to infrastructure pledges—fell short of the economic relief and rapid project execution that New Delhi provided. This gap underscored India’s unique capacity to deliver both political heft and on-the-ground assistance.
Key Agreements and Initiatives
During Modi’s two-day visit, both sides launched a series of landmark initiatives:
- Launch of Free Trade Agreement negotiations to deepen economic integration
- Network-to-network UPI pact enabling seamless digital payments for tourists and locals
- Issuance of a commemorative stamp celebrating 60 years of diplomatic ties
These outcomes were celebrated as a “defining visit that sets a clear path” for future cooperation, in President Muizzu’s words.
From Chill to Warmth
The arc from distrust to deepened partnership within less than two years reveals the power of sustained engagement, economic generosity and respect for sovereignty. India’s “Neighbourhood First” policy and the Maldives’ pragmatic recalibration now chart a course for stronger maritime security, climate resilience and people-to-people links across the Indian Ocean.
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| Bollywood celebrities opted for Lakshadweep |
Looking Ahead
As negotiators begin detailed FTA talks and technical teams integrate UPI, the real test will be converting diplomatic warmth into tangible gains for Maldivian citizens and Indian businesses alike. Beyond economics, this reset offers a model for managing neighbourhood disputes: prioritising dialogue, economic lifelines and a shared vision for regional stability.
What might shape the next chapter?
- Deep dives on how an India-Maldives FTA could transform Maldivian trade patterns.
- Analysis of joint maritime domain awareness under Vision MAHASAGAR.
- Case studies of high-impact community Development Projects accelerated through India’s Lines of Credit.
- Reflections on balancing great-power outreach with small-state agency in the Indian Ocean.
The evolving dynamic between India and the Maldives signals a significant shift toward collaborative engagement, reflecting a shared commitment to mutual prosperity and regional stability. As both nations embark on the ambitious journey of deepening trade ties and enhancing maritime security, the potential for transformative economic partnerships becomes increasingly evident. The groundwork laid during Modi's historic visit and subsequent agreements sets a promising precedent not only for bilateral relations but also for the broader Indian Ocean region. Moving forward, the success of this partnership will hinge on both countries' ability to foster continual dialogue, maintain economic cooperation, and prioritise the well-being of their citizens, ultimately creating a resilient and harmonious neighbourhood.
India-Maldives relations
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