India Announces ₹4,850 Crore Line Of Credit For Maldives, Agrees To Finalise Free Trade Deal Soon

Male: India on Friday announced a Rs 4,850 crore line of credit for the Maldives and agreed to finalise a free trade deal soon, with Prime Minister Narendra Modi emphasising that New Delhi is proud to be the "most trusted" friend of the Indian Ocean archipelago.

New Delhi also decided to reduce the Maldives' annual debt repayment obligations by 40 per cent (from USD 51 million to 29 million), seen as a significant move to help the country deal with its economic woes. These measures were announced after PM Modi held extensive talks with Maldivian President Mohamed Muizzu that focused on deepening bilateral cooperation in a range of areas, including trade, defence and maritime security.

The two sides sealed six pacts in the fields of fisheries and aquaculture, meteorology, digital public infrastructure, UPI, Indian pharmacopoeia, and for India's concessional line of credit to the island nation.

"For us, it is always friendship first," Modi said in his media statement, adding the "roots of our relations are older than history, and as deep as the ocean." The outcomes of the Modi-Muizzu talks signalled a major turnaround in the relationship after a spell of unease and tension. The renewed intensity in the ties assumes significance as Muizzu came to power in November 2023 on the back of an "India Out" campaign.

India-Maldives friendship will always "remain bright and clear" irrespective of any circumstances, the prime minister said, outlining his vision for the relationship. To give a new momentum to our development partnership, we have decided to give a line of credit of USD 565 million (Rs 4,850 crore) to Maldives, Modi said. This amount will be used for projects related to the development of infrastructure in the Maldives, in accordance with the priorities of the people of the country, he added.

In his comments, Muizzu appreciated India's "pivotal role" in supporting the Maldives to manage its economic challenges. "India's continued assistance to the Maldives through the export of essential commodities is a key facet of our bilateral cooperation under the long-standing trade agreement," he said. At a media briefing, Foreign Secretary Vikram Misri said a key pact inked following the Modi-Muizzu talks was to reduce the Maldives' annual debt repayment to India by 40 per cent.

It is learnt that China's increasing assertive behaviour and its implications for regional security figured in the delegation-level talks between the two sides. To a question on whether concerns over China's activities in the region figured in the talks, Misri only said India continues to work closely with the Maldives on any issue that might "impinge not just our security but the common security of the region".

In his remarks, PM Modi said the two sides will soon work towards finalising a bilateral investment treaty and that the negotiations on a free trade agreement have already begun. Noting that the two countries must take advantage of the digital economy, especially to promote tourism, he welcomed the recent understandings on UPI adoption, acceptance of RUPAY card and trade in local currencies. "The speed with which UPI is being promoted in Maldives will give a boost to both tourism and retail," he said.

Modi and Muizzu also jointly inaugurated a number of India-assisted projects, including a new defence ministry building in Male, roads and drainage systems in Addu city and 3,300 housing units in Hulhumale. The prime minister also handed over 72 vehicles and equipment for use by the Maldives National Defence Force. The defence ministry building is a "concrete building of trust" and it is a symbol of our "strong partnership", the prime minister said.

"India will continue to support Maldives in the development of its defence capabilities. Peace, stability and prosperity in the Indian Ocean region is our common goal," he said. The comments came against the backdrop of New Delhi's concerns over China's attempts to expand its influence over the Maldives. In his remarks, Modi said the Maldives holds an "important place" in both India's "Neighbourhood First" policy and its MAHASAGAR (Mutual and Holistic Advancement for Security and Growth Across Regions) vision.

"India is also proud to be the most trusted friend of Maldives. Be it a disaster or a pandemic, India has always stood by as a 'first responder'," he said. The prime minister also referred to India and the Maldives unveiling a vision for a comprehensive economic and maritime security partnership during Muizzu's visit to New Delhi in October last year. "Now it is becoming a reality. And as a result of that, our relations are touching new heights," he said.

"We have taken several steps to accelerate our economic partnership. To accelerate mutual investment, we will soon work towards finalising the bilateral investment treaty. Negotiations on a free trade agreement have also begun," Modi said. The two leaders also released a commemorative stamp on the occasion of the 60th anniversary of the establishment of India-Maldives diplomatic relations. The stamp depicts the Indian boat Uru, a large wooden dhow handcrafted in the historic boatyards of Beypore, Kerala, and the traditional Maldivian fishing boat -- Vadhu Dhoni.

"The postage stamp released today, which has the traditional boats of both countries, shows that we are not only neighbours, but also fellow travellers," Modi said. The prime minister arrived here from London in the second and final leg of his two-nation trip. Modi was accorded a warm welcome with Muizzu and a number of top ministers of his government receiving him at the Velena International Airport. Hours later, Modi was accorded a colourful ceremonial welcome and a guard of honour at the iconic Republic Square.

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