The Dynamic Relationship between India & Maldives.

• The evolving ties between India and the Maldives have encountered challenges, notably with President Mohamed Muizzu's tenure, which commenced in November 2023.
• Prime Minister Narendra Modi's visit to Lakshadweep heightened tensions, particularly impacting the Maldives' tourism industry, a cornerstone of its economy. Despite historic cooperation in trade, defense, and tourism since Maldives' independence in 1965, strained relations emerged with Muizzu's pro-China stance, evident in the expulsion of Indian soldiers.
• Geopolitically, Maldives' strategic location in the Indian Ocean underscores its significance for India, while cultural affinities and tourism strengthen bonds. However, recent controversies, including disrespectful remarks towards PM Modi, underscore ongoing challenges, despite diplomatic efforts to mend relations.

Under the Neighbourhood First Policy, Maldives holds strategic importance in the Indian Ocean region.

• India recently extended $50 million in interest-free aid, following the withdrawal of Indian troops.
• This gesture signifies India's commitment to balanced relations with its neighbours, particularly Maldives.
• However, Maldives faces a debt crisis, with IMF warning of escalating debt, already reaching $8.7 billion, exceeding its $6.5 billion GDP. To alleviate this, Maldives agreed to trade with India, settling payments in local currency, moving away from the US Dollar.