First published by Observer Research Foundation on Feb 10, 2025 as the Maldives Chapter of its Special Report on “A Decade of Neighbourhood First: Perspectives from South Asia
As India marks a decade of its ‘Neighbourhood First’ policy under Prime Minister Narendra Modi, its relationship with the Maldives stands as a testament to the complexities of engagement.
The past 10 years have seen India navigate the ebbs and flows of Maldivian politics: from the ‘India-First’ stance of one government to the ‘#IndiaOut’ of another, Maldives has been a true litmus test for India’s Neighbourhood First policy. It has been a decade of diplomatic finesse, fall-outs, and rapprochements. Maldivian presidential campaigns polarised around India; a diplomatic crisis erupted over derogatory comments by Maldivian ministers about Modi, with celebrities like Sachin Tendulkar and Salman Khan[i] boycotting Maldives, impacting its tourism-dependent economy—all while Beijing’s influence moved from the periphery to the centre of Maldivian affairs.
The Successes
Over the years, India has solidified its position as the most important international partner for the Maldives:
- India’s development assistance is extensive and widely acknowledged by Maldivians as invaluable.
- Throughout political shifts in Maldives, India has preserved its strategic importance, with successive Maldivian administrations recognising the necessity of Indian support, even when initial stances were unfavourable.
- India has effectively leveraged aid and responsiveness to counter Chinese influence, reinforcing its status as Maldives’ primary international ally.
This dynamic benefits both nations. For Maldives, it secures much-needed assistance while counterbalancing China’s influence, whereas for India, it is an investment in regional stability: Maldives serves as both a shield and bridge in the Indian Ocean.
Strategic Leverage: India’s Comprehensive Aid and Financial Support
India’s extensive development aid is the single most powerful driver of India’s diplomatic clout in the Maldives. The aid is broad-based and spans the decade, ranging from street lights in tiny islands to the Dornier aircraft, which entered domestic electoral rhetoric. This spectrum of interventions maintains India’s visibility across Maldivian society.
Greater Malé Connectivity Project’s US$500-million bridge, the Hanimadhoo Airport expansion,[ii] and a 4,000-unit housing project are prominent investments. Other projects include water and sewerage systems[iii] on 34 islands and numerous police posts.[iv] High Impact Community Development Projects span[v] over 60 islands, from school buses to fish-processing plants. India is Maldivians’ preferred destination for medical treatment. India provides security assistance and completed a hydrographic survey of the Maldivian seabed. Crucially, India and Maldives have initiated discussions on a Free Trade Agreement.[vi]
India’s infrastructure aid is reinforced by financial assistance, spanning different Maldivian administrations. This includes currency swaps, multiple credit lines totalling over US$1.4 billion,[vii] budgetary support, and purchase of Maldives Treasury Bonds.
India has also positioned itself as a reliable first responder during crises. Amid the 2014 water crisis,[viii] India delivered 1,200 tonnes of water to the residents of Malé. During the COVID-19 pandemic, India supplied Maldives with over 200,000 doses of India-manufactured vaccines[ix] within hours of their country-wide rollout while managing its own crisis. India, Maldives’ primary source of staples, continued supplies during lockdown, alleviating fears of food shortage. When Maldives reopened its borders mid-pandemic in 2020, Indians topped tourism arrivals,[x] replacing China and contributing to tourism, which is the biggest contributor to Maldives’ GDP. This influx, which provided a lifeline to Maldives’ tourism-dependent and hard-hit economy, was clearly not without a little push from the Indian government. Maintaining its role as a crisis responder, in October 2024, India initiated a currency swap facility of US$750 million and treasury bills worth US$100 million during Maldives’ financial crisis.
This pattern of aid has shaped Maldivian public perception. India has cultivated an image of indispensability in Maldives and created a presumption of Indian aid during times of crisis. Whether faced with financial strains, food shortages, or health emergencies, there is a tacit expectation about India’s intervention.
Diplomatic Resilience: Beyond the Electoral Cycle
The historically strong India-Maldives relationship underwent a transformation under Abdulla Yameen’s presidency (2013-2018). Relations with India soured, with a pronounced tilt towards China. The hostility culminated[xi] just before the end of Yameen’s tenure, when he asked India to take back two gifted helicopters and refused to extend visas for Indian personnel, accusing them of espionage. By the time Yameen left office, China had become the biggest lender[xii] to Maldives. These developments raised alarm bells in New Delhi that Maldives could become a hostile port in its neighbourhood.
There was a shift with Ibrahim Mohamed Solih’s election in 2018, demonstrating how deeply domestic politics influence diplomatic relations. Solih’s government pivoted back to India, and the administration’s years (2018-2023) were marked by the ‘India-First’ policy of the governing party. Just after Solih’s election, Prime Minister Modi announced US$1.4 billion[xiii] in financial assistance to Maldives, aimed at managing the debt accumulated from the Chinese building spree. Indian aid flowed apace, intensified during the pandemic, and reached unprecedented levels as the 2023 presidential elections approached. Solih’s government leveraged this support to address the country’s economic challenges and bolster its political position.
The pendulum swung again with Mohamed Muizzu’s election in 2023. Muizzu’s campaign,[xiv] with ‘#IndiaOut’ as its cornerstone, stoked anti-India sentiment. As president, he acted on his promises, ordering the removal of the crew of Indian military helicopters[xv] and announcing the review of existing agreements. His continued anti-India rhetoric left Maldivian experts and diplomats alike pondering: Is India out of Maldives?
A year later, president Muizzu’s stance has shifted. With Maldives facing financial meltdown, pragmatism has overtaken sloganeering. Muizzu’s first bilateral visit to India in October 2024 resulted in a number of key agreements, accompanied by a distinct change in rhetoric, signalling rapprochement.[xvi] This shift reflects a sobering realisation that the debt-burdened Maldives cannot alienate its large neighbour.
President Muizzu’s pivot away from his #IndiaOut stance serves as perhaps the most compelling vindication of India’s Neighbourhood First policy in Maldives. India’s measured, patient diplomacy has outlasted Maldivian political fluctuations. For Maldives, India’s timely assistance has alleviated immediate default fears.
Geopolitical Balance: Mitigating China’s Influence in the Maldives
India’s aid strategy serves key geopolitical aims. With key maritime trade routes traversing its waters, Maldives is crucial for India. Meanwhile, China’s Belt and Road Initiative found fertile ground in Maldives, and Maldives has borrowed heavily from China over the past decade, accounting for over 20 percent of Maldives’ foreign debt.[xvii] This growing Chinese economic influence undermines India’s sway in its neighbourhood.
Despite a seemingly promising start for the Muizzu administration’s China relations, financial assistance from the superpower has not materialised as expected. China has not emerged as the eager lender that the Maldives government anticipated. Its restrained approach to credit[xviii] and concessions prompted the Muizzu administration to explore alternative financial support avenues. India’s swift provision of US$4 billion in emergency assistance to Sri Lanka[xix]during its 2022 financial crisis will also likely resonate with the Muizzu government.
During Muizzu’s October 2024 India visit, New Delhi enhanced its Maldives support,[xx] offering additional financial aid and expanding infrastructure, development, trade, and defence commitments. As the Maldivian government faces mounting external debt and unpaid domestic bills amid China’s waning lending enthusiasm, India’s swift response to the fiscal urgency has bolstered its leverage.
Maldives’ debt profile necessitates a balanced foreign assistance approach to protect economic sovereignty. India’s aid prevents single-creditor overreliance while countering China’s influence—a mutually beneficial arrangement.
China’s infrastructure projects in the Maldives, while ambitious in scale, have a complex legacy. The China-Maldives Friendship Bridge stands as the most visible Chinese project, improving inter-island connectivity but at a significant cost, both financially and in terms of debt burden. Other Chinese projects, including the expansion of the Velana International Airport and housing developments, have faced criticism for their high costs, quality concerns, and lack of transparency in contracts.[Aswathy1] Many projects were priced significantly above market rates, contributing to Maldives’ substantial debt to China. The housing units, while addressing immediate needs, came with inflated costs that the Maldivian government struggles to recover through rental income. In contrast, most Indian infrastructure assistance has typically focused on smaller-scale, community-oriented projects with clearer cost-benefit ratios. Additionally, India’s projects have generally maintained transparency in contracting and costs.
The Maldives case exemplifies India’s measured and patient approach to maintaining influence in the Indian Ocean region. Through strategic partnerships, economic assistance, and timely aid, India has worked to maintain the region as a zone of peace while subtly counterbalancing Chinese influence and while protecting its own core interests. This multidimensional strategy, rather than overt militarisation or confrontation, has proven to be relatively successful in preserving India’s traditional role as the primary security provider in the IOR while adapting to new geopolitical realities.
Challenges and Missteps
Despite these successes, the past decade has been a testing time for India in Maldives as a result of both Maldivian political manoeuvring and Indian missteps. Anti-India sentiment emerged in Maldives politics for the first time, straining historically warm ties, with some factions embracing jingoistic anti-India rhetoric for political gains. Elements of India’s approach added to the scepticism:
- Protracted delays in infrastructure projects eroded confidence in India’s ability to deliver.
- Perceived overreach in Maldivian affairs, particularly concerning military presence, ignited accusations of interventionism.
- The scale of Indian aid raised concerns of over-dependence and potentially jeopardising Maldivian economic autonomy.
Implementation Gaps: The Cost of Project Delays
India’s Maldives projects, though ambitious, face significant implementation challenges.[xxi] The Greater Malé Connectivity Project, intended as a flagship endeavour, has become fodder for political mudslinging due to its protracted timeline. This pattern extends to other key initiatives, including Addu roads, Hanimadhoo Airport, and critical water and sewerage systems on multiple islands.
These delays carry a hefty price. In Maldives, infrastructure projects serve as potent political symbols and are often inaugurated with great fanfare. Extended timelines in such publicised projects erode confidence in both the Maldives governments that laud the projects and the underlying bilateral relationship. Just as there is a presumption of aid from India, there is also a perception of delay.
Influence Dilemma: Perceptions of Overreach and Intervention
India’s Maldives engagement has faced challenges in balancing supportive partnership with perceived interference. On the one hand, close alignment with specific political factions has fostered an image of India being vested in particular political outcomes. From sheltering President Mohamed Nasheed at its High Commission in Malé in 2013, to openly opposing President Yameen’s authoritarianism, and its barely veiled support for President Ibrahim Mohamed Solih during the last presidential elections, India’s actions [Aswathy2] have sparked backlash in Maldivian political circles.
Some Indian projects and agreements have further complicated this delicate balance. While development aid is highly welcomed, certain initiatives, such as the UTF naval base,[xxii] have sparked debate across the local political spectrum. The poorly handled public communications surrounding these agreements intensified perceptions of Indian intervention. Questions about the necessity of these ambitious projects in an indebted nation of just over 500,000 people further fuelled perceptions of Indian overreach. Consequently, India finds itself cast in a paradoxical role, perceived simultaneously as an indispensable partner and an interventionist neighbour.
Scale of Assistance: Balancing Aid and Autonomy
The scale of India’s assistance in Maldives creates both influence and indebtedness. Indian assistance is crucial for Maldives, especially right now, and especially for debt management. However, endlessly pumping Indian taxpayers’ money into Maldives to manage its debt to China and other bond-holders is not a sustainable approach for either partner. For New Delhi, fostering economic autonomy is the challenge.
Historically, Maldives has maintained diverse international partnerships, with countries like the United Kingdom (UK), United States (US), European Union (EU) nations, Sri Lanka, and Japan. The recent trend of aligning predominantly with either India or China marks a significant shift, narrowing diplomatic options. The challenge for Maldives, especially given its current fiscal woes, is mitigating over-reliance on any single economic partner. Diverse partnerships will strengthen the Maldivian economy, better balancing international cooperation with national interests.
A Maldives that is stable, secure, and fiscally independent will prove a more resilient ally, better equipped to withstand domestic political fluctuations and external pressures. A truly autonomous Maldives will better align with both nations’ long-term strategic interests, ultimately promising a more mutually advantageous partnership in the neighbourhood.
The Path Ahead
As India’s Neighbourhood First policy enters its second decade, the geopolitical landscape presents unprecedented challenges. The world faces an unparalleled number of active conflicts since the Second World War, while grappling with transformative forces like artificial intelligence (AI), accelerating climate change, and evolving transnational crime. The Indian Ocean region will not remain insulated from these global currents.
India’s engagement in the region will likely deepen, and the relationships must now adapt to new security dynamics in the age of AI and cybercrime, while managing traditional threats and the economic aftermath of the past decade’s debt cycles.
For the Maldives, India will remain its most consequential partner; traditional partners like the UK, US, and EU have largely endorsed India’s stewardship in the region through their own strategic partnerships with New Delhi. This strategic reality defines Maldives’ options.
Maldivian foreign policy must ultimately serve its citizens’ interests, with economic sovereignty and prosperity at its core. The weight of debt has become the primary driver of Maldives’ international relations. While India possesses the means to assist with debt management, the challenge lies in providing support without fostering dependency.
The path forward requires a delicate balance. Maldives must enhance its fiscal resilience, maintain good governance, and diversify its international partnerships to avoid over-reliance on any single partner. Such measures would create a more resilient economic framework that protects Maldivian interests while benefiting from international cooperation.
[i] “Akshay Kumar, Sachin Tendulkar Join Campaign to Boycott Maldives and Its Tourist Spots,” Times of India Travel, January 8, 2024, https://timesofindia.indiatimes.com/travel/travel-news/akshay-kumar-sachin-tendulkar-join-campaign-to-boycott-maldives-and-its-tourist-spots/articleshow/106614376.cms.
[ii] “Press Release on Visit of a Team From the Airports Authority of India (AAI),” High Commission of India Male, Maldives, November 12, 2020, https://hci.gov.in/male/?11855?000.
[iii] “Press Release for GMCP Signing India Undertakes Largest Ever Infrastructure Project in Maldives,” High Commission of India Male, Maldives, September 28, 2021, https://hci.gov.in/male/?13440?003#:~:text=The%20water%20and%20sanitation%20project,Narendra%20Modi%20on%20July%2014.
[iv] “Maldives Police, ABL Indira Projects Sign USD 48M Infrastructure Development Deal,” SunOnline International, July 17, 2021, https://en.sun.mv/67875.
[v] “India–Maldives High Impact Community Development Projects (Status as on November 2023),” High Commission of India Male, Maldives, November 2023, https://hci.gov.in/male/?pdf17749.
[vi] Harsh V. Pant and Aditya Gowdara Shivamurthy, “New Beginnings and Old Complexities in India-Maldives Ties,” Observer Research Foundation, October 10, 2024, https://www.orfonline.org/research/new-beginnings-and-old-complexities-in-india-maldives-ties.
[vii] “India-Maldives Bilateral Relations,” High Commission of India Male, Maldives, June 2024, https://hci.gov.in/male/?pdf17555?000.
[viii] BBC News, “Maldives in Water Crisis After Fire at Treatment Plant,” December 5, 2014, https://www.bbc.com/news/world-asia-30344155.
[ix] “COVID-19 Vaccines Shipped by COVAX Arrived in Maldives,” United Nations Maldives, March 8, 2021, https://maldives.un.org/en/115607-covid-19-vaccines-shipped-covax-arrived-maldives.
[x] “India – Top Source Market for Tourist Arrivals in 2020,” SunOnline International, January 4, 2021, https://en.sun.mv/64643.
[xi] “Understanding the ‘India Out’ Campaign in Maldives,” Observer Research Foundation, October 7, 2022, https://www.orfonline.org/research/understanding-the-india-out-campaign-in-maldives.
[xii] “Maldives Gets IMF Debt Warning as More Chinese Loans Loom,” The Hindu, May 14, 2024, https://www.thehindu.com/news/international/maldives-gets-imf-debt-warning-as-more-chinese-loans-loom/article68171903.ece.
[xiii] “Indian Prime Minister Announces US$1.4 Billion Assistance to Maldives,” Maldives Independent, December 17, 2018, https://maldivesindependent.com/politics/indian-prime-minister-announces-us1-4-billion-assistance-to-maldives-143188.
[xiv] Manoj Joshi, “Muizzu’s Landslide Victory in Maldives,” Observer Research Foundation, April 25, 2024, https://www.orfonline.org/expert-speak/muizzus-landslide-victory-in-maldives.
[xv] Sanjay Kapoor, “‘India Out’: Maldives President Eyes Middle East Partners With Early Trips,” Al Jazeera, December 21, 2023, https://www.aljazeera.com/features/2023/12/21/india-out-maldives-president-eyes-middle-east-partners-with-early-trips.
[xvi] “x.com,” X (Formerly Twitter), https://x.com/orfonline/status/1846824721209532558.
[xvii] AFP, “Maldives Gets IMF Debt Warning as More Chinese Loans Loom,” The Hindu, May 14, 2024, https://www.thehindu.com/news/international/maldives-gets-imf-debt-warning-as-more-chinese-loans-loom/article68171903.ece.
[xviii] “China: Restructuring Debt Will Pose Obstructions to Acquiring Future Loans,” SunOnline International, May 16, 2024, https://en.sun.mv/89486.
[xix] Ammar Nainar, “India’s Foreign Assistance: Trends, Processes, and Priorities — ORF America,” ORF America, May 29, 2024, https://orfamerica.org/newresearch/india-foreign-assistance-priorities.
[xx] “India and Maldives: A Vision for Comprehensive Economic and Maritime Security Partnership,” Ministry of Foreign Affairs, Republic of Maldives, October 8, 2024, https://foreign.gov.mv/index.php/en/media-center/news/india-and-maldives-a-vision-for-comprehensive-economic-and-maritime-security-partnership.
[xxi] “Delays and Challenges Surround the Greater Male’ Connectivity Project | Maldives Financial Review,” November 25, 2023, https://mfr.mv/male/delays-and-challenges-surround-the-greater-male-connectivity-project.
[xxii] “Understanding the ‘India Out’ Campaign in Maldives.”
[Aswathy1]Cite.
[Aswathy2]Correct?
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