Improved bilateral ties between India and China have helped countries like the Maldives in the Indian subcontinent. “Earlier, we felt sandwiched between the two nations,” Mohamed Nasheed, former President of the Maldives, told Business India. “The improvement in their relationship has really helped our nation, as we would like to co-exist and partner with both.”
Bilateral ties between India and the Maldives have improved over the past one year, following a period of uncertainty marked by anti-India campaigns. All the issues involved seem to have been settled, especially after Prime Minister Narendra Modi visited Male in July 2025. During his visit to the Maldives on its 60th Independence Day, PM Modi focussed on the resetting of bilateral ties, offering a $565 million credit line and boosting economic/security co-operation under the ‘Neighbourhood First’ policy. Key outcomes during his visit included six+ MoUs, adoption of the UPI and support for the Maldives’ economic stability.
“I am confident that India-Maldives friendship will scale new heights of progress in the times to come,” PM Modi had said in Male, during his visit last year, following which there was a thaw in the relations between the two nations that had hit a rough patch when President Mohamed Muizzu came to power. There were issues raised on India’s military presence (88 military personnel), who were replaced by civilian staff. The military personnel were operating two helicopters and a Dornier aircraft for medical evacuations and maritime patrol.ho
“We have had amicable relations with India since then, and the overall sentiment about India has improved,” Nasheed added.
Meanwhile, the ongoing conflict in West Asia that led to the sinking of an Iranian naval ship, Iris Dena, and the death of 87 Iranian naval officers, has got the Indian sub-continent worried. This ship had set sail after a military exercise in Visakhapatnam in India and was seeking clearance to dock in Sri Lanka when it was unexpectedly attacked.
“We don’t want the war to spill over into our waters,” remarked former President Nasheed. “I feel it’s worrying that this war is coming home to us. India is the net security provider in the region, and we are confident that India will rise to the occasion”.
The Maldives depends primarily on tourism and any conflict has a direct impact on the footfall of visitors. “Tourism is our biggest strength. When travel hubs are disrupted throughout the Middle East, including Dubai and Doha, it has a direct impact on tourist arrivals, which are now down by 30 per cent,” admitted Nasheed.
Better relations
The Maldives has also appreciated the improvement in its relations with India. “India has consistently supported the Maldives in times of crisis, including the 1988 coup, the tsunami, the water crisis, as also during the Covid pandemic,” Nasheed said. “Given the current situation, I understand the Maldives has requested fuel assistance from India. It is essential for us to demonstrate responsibility as well. Strengthening democracy in the Maldives is crucial for regional resilience. We are now going into a period of stability in our regional relationships, as we consolidate democracy, as well as our foreign policy,’’ he added.
India has bolstered the Maldives’ economy by extending a $565 million (Rs4,850 crore) line of credit to it and restructuring debt repayments to ease its financial burden. The total financial assistance to the Maldives has risen to $1.4 billion – with large portions given out for infrastructure projects.
The Maldives faces a serious debt challenge at present. There are also repayment pressures. Public and publicly generated (PPG) debt stands at $9.5 billion (which is 126.9 per cent of the island nation’s GDP). Debts from China are high too – mainly due to the nation’s infrastructure projects that China has invested in.
“With China, we have a lot of debt, which can be used as a disciplining agent. This debt is expensive not just because of interest rates; they are also pressured by the prices of the projects,” Nasheed said, adding that some of these project costs were intentionally hiked so that they would become financially unfeasible and unviable. “As a result, the debt burden has increased. They are now asking for equity from the infrastructure projects but diluting the equity affects our sovereignty and that is an area of concern. However, China seems to be understanding our difficulties now and we hope things will be a bit more relaxed,” he added.
The infrastructure projects anchored by India includes Hanimaadhoo Airport (operational) and the Thilamale Bridge (part of the Greater Male Connectivity Project), amongst others.