India-Maldives Strategic Ties: 6 MoUs Signed and ₹4,850 Cr Line of Credit Extended

India has agreed to sign six major Memoranda of Understanding (MoUs) with Maldives to strengthen fisheries, meteorology, digital infrastructure, UPI and healthcare. The island country was given a 4,850 crore line of credit. Discussions resulted in the initiation of negotiations of Free Trade Agreement (FTA). An agreement to the amendment funneled India to reduce the money paid by Maldives per annum in terms of its debt repayment by 40 percent. The initiatives manifest the Neighborhood First strategy and Indian Ocean Region strategy of India.

Context:

• The signing of the agreements took place when PM Narendra Modi paid a state visit to Male in July 2025 when the geopolitics of the Indian Ocean was changing. 

• It is the initial trip Modi made following the ascents of Mohamed Muizzu to the position of President. 

• Such a visit was at a time when the foreign policy of Maldives was at world spotlight due to its struggle to balance between India, and China.

Key Developments:

• MoU signed:

• Fisheries and Aquaculture- Strengthening blue cooperation.

• Meteorology Sharing of data and climate resilience.

• Digital Public Infrastructure- Unified Payments Interface, RuPay, and the tools of digital governance.

• Indian Pharmacopoeia - An alignment of regulation on medicine.

• Line of Credit 9 4850 crore (Kinda USD 580 million) in infrastructure and development.

• Care & Education - Assistance on the basis of health care, housing, and advanced education.

Debt Restructuring:

• The debt repayment of Maldives was decreased to USD 29 million in a year against USD 51 million in a year due to the amendatory agreement which relieved the fiscal pressure on Male.

Free Trade Agreement - FTA:

• Negotiations officially started by exchange of Terms of reference.

• Objective: To increase the trade, investment and local currency based trade.

Defence and Maritime Security:

• Opening of the new building of the Defence Ministry of Maldives (aided by India).

Handover of:

• 3, 300 social housing units,

• 72 defence and immigration vehicles,

• Lawning of 6 High Impact Community Development Projects.

• The cooperation was reiterated in Colombo Security Conclave towards regional maritime security.

Huge Infrastructure Projects:

• Addu City Road & Drainage system Project:

• 111 km of roads, 106 km drainage, 160 km street light.

• This is being undertaken by Afcons Infrastructure with funds provided by Exim Bank.

Geopolitical Significance:

• Strategic Outreach in IOR: Reinforces India in the Maldives where Chinese presence is on the increase.

• Neighbourhood First SAGAR Doctrine: Strengthens India commitment towards safe and secure neighbourhood.

• Soft Power Diplomacy: The use of healthcare, digital means, infrastructure, and education help to promote the Indian model of development.

Challenges

• Striking the equilibrium of China-Maldives-India triangle: Indian strategic space is concerned with the proximity Maldives establishments with China.

• Debt Trap Diplomacy Risk: Debt Trap Diplomacy is a risk that India is countering through the concessional loans that China uses in its opaque model of dispensing debt.

• Deployment: Successful deployment of infrastructure, health and defence projects should be under continuous scrutiny.

Conclusion:

The recent treaties between India and Maldives is a milestone in making bilateral relations much stronger and to strengthen its presence in the Indian Ocean Region. India would like to counter foreign intervention and protect its sea interests through strategic investment, digital cooperation with defence, and the humanitarian sector. These agreements will have a chance of success only in the case of the continued engagement, local goodwill, and transparent implementation process.