Reset in India-Maldives Relations

• 28 Jul 2025

For Prelims: MAHASAGAR, Free Trade Agreement (FTA), Bilateral Investment Treaty (BIT), Aarogya Maitri Health Cubes (BHISHM), Operation Neer, Operation Cactus, EEZ, Colombo Security Conclave.                        

For Mains: Significance of a healthy India-Maldives relations for maintaining peace, stability and prosperity in the Indian Ocean region. 

Source: IE

Why in News? 

India's Prime Minister participated as the guest of honour at the 60th Independence Day celebrations of the Maldives, marking a reset in bilateral ties between the two nations. 

• This is significant as India-Maldives ties have been strained under the current Maldivian President due to his India Out campaign and derogatory social media remarks by officials linked to his administration. 

What are the Key Outcomes of the Visit? 

• Progress on Strategic Partnership: Both countries reviewed the progress of the 2024 Economic and Maritime Security Partnership, and India reaffirmed its "Neighbourhood First" and MAHASAGAR policies. 
• Economic & Digital Partnership: India highlighted that the proposed Free Trade Agreement (FTA) and Bilateral Investment Treaty (BIT) would create new opportunities for both nations. 
  • Both countries welcomed agreements on UPI, RuPay card, and local currency trade to boost the digital economy and tourism. 
• Financial Support: India extended a USD 550 million Line of Credit (LoC) for infrastructure, while an Amendatory Agreement on existing LoCs cut Maldives’ annual debt repayment by 40%. 
• Infrastructure & Social Projects: Both countries inaugurated key infrastructure projects, including roads and drainage in Addu City, 6 community development projects, and 3,300 social housing units. 
• Healthcare & Disaster Support: India donated two Aarogya Maitri Health Cubes (BHISHM), equipped to provide emergency medical aid for up to 200 casualties. 

 

What Encouraged the Maldives to Recalibrate its Ties with India? 

• Severe Economic Crisis: The Maldives was recently grappling with a major economic downturn, with foreign exchange reserves falling to USD 440 million.  
  • Adding to the strain, Moody’s downgraded the country’s credit rating due to the risk of debt default. 
• Economic Dependence on India: The Maldives relies heavily on Indian tourists, a key source for its tourism sector. Strained ties led to a loss of around USD 150 million. 
  • India also supplies essential goods like food, medicines, and construction materials to Maldives. 
• India’s Strategic Role: India has historically played a vital role in Maldives' development and security. Alienating India could jeopardize regional stability and security.  
  • The Maldivian President acknowledged India as the ‘First Responder’ during crises like the 2014 water crisis (Operation Neer), Covid-19 pandemic, and Operation Cactus (1988), highlighting strong security and humanitarian ties. 
• Geopolitical Balancing with China: The softened stance reflects a pragmatic effort to balance relations with both India and China, ensuring the Maldives can benefit from India’s support while maintaining a diversified foreign policy. 
• Political Realism: It signals a strategic recalibration to protect and strengthen ties with India, recognizing its economic and geopolitical significance. 

Why is a Reset in India-Maldives Relations Crucial for Both Nations? 

Significance of Maldives for India 

• Strategic Location: Positioned along key International Shipping Lanes (ISLs) in the Indian Ocean, the Maldives plays a crucial role in facilitating global trade and energy flow.  
  • Notably, 50% of India’s external trade and 80% of its energy imports transit through these waters. 
• Countering China’s Influence: India considers the Maldives a strategic ally to help counterbalance China’s growing presence in the Indian Ocean region and safeguard its own security interests. 
• Indian Ocean as India’s Strategic Sphere: India views the Indian Ocean as its backyard, making a stable and cooperative maritime environment vital to its strategic goals. The Maldives is a key partner in ensuring regional maritime stability. 

India’s Significance for Maldives 

• Security Cooperation: India has a longstanding role as a security provider, notably through Operation Cactus (1988) to thwart a coup, and regular joint exercises like Ekuverin, Dosti, and Ekatha to enhance defense collaboration. 
• Tourism Contribution: Indian tourists have emerged as the top source market for the Maldives accounting for 11.2% of arrivals in 2023. 
• Education Partner: India is the preferred destination for Maldivian students pursuing higher education, offering scholarships and access to prestigious institutions.  
• Climate Change Cooperation: Given the Maldives’ vulnerability to sea-level rise and other climate-related risks, it serves as a significant partner for India in advancing climate change adaptation and mitigation efforts. 
• Disaster Relief and Humanitarian Support: India has consistently extended aid during emergencies, including tsunamis, drinking water shortages, and the Covid-19 pandemic, reinforcing its role as a dependable partner. 

What can be Done to Further Strengthen India-Maldives Relations? 

• Economic & Developmental Cooperation: India and Maldives should expedite the FTA, boost Indian investments, and adopt local currency trade to enhance economic ties. 
  • India should fast-track key projects like Greater Malé Connectivity Project (GMCP), and develop undersea cable links to strengthen digital infrastructure and reduce Chinese dependence. 
• Security & Strategic Collaboration: India should strengthen maritime security with the Maldives through joint patrols, EEZ monitoring, donation of patrol vessels and drones, and enhanced intelligence-sharing. 
  • India should leverage the Colombo Security Conclave to enhance regional security cooperation. 
• People-to-People Ties: India should counter the India Out narrative by engaging Maldivian youth and supporting independent media, while encouraging film collaborations to boost cultural ties. 
• Diplomatic & Political Outreach: India should pursue high-level engagement through frequent visits and Track-II diplomacy (think tanks, academic exchanges), while avoiding public spats, and addressing sovereignty concerns with sensitivity. 

Conclusion 

The India-Maldives reset is crucial for regional stability, countering China’s influence, and mutual economic growth. By prioritizing trade, security, and people-to-people ties, India can solidify its role as Maldives’ trusted partner. Strategic diplomacy, timely project execution, and soft power engagement will ensure long-term cooperation in the Indian Ocean. 

Drishti Mains Question:

Examine the strategic and economic significance of Maldives for India in the context of changing regional geopolitics. 

UPSC Civil Services Examination, Previous Year Questions (PYQs)  

Mains 

Q. Discuss the geopolitical and geostrategic importance of Maldives for India with a focus on global trade and/energy flows. Further also discuss how this relationship affects India’s maritime security and regional stability amidst international competition? (2024)

Q. Discuss the political developments in the Maldives in the last two years. Should they be of any cause for concern to India? (2013)