$565m LoC, better loan terms for Maldives as PM says friendship first | India News

The turnaround in India-Maldives ties in the past 10 months – following the acrimonious removal of Indian military personnel from the strategically located country – seemed complete as India announced a fresh $ 565 million line of credit (LoC) for the Indian Ocean neighbour and signed an agreement to reduce its annual debt repayment burden by 40 percent.As President Mohamed Muizzu hosted PM Narendra Modi for the latter’s first visit to the country under his presidency, receiving Modi at the airport, both sides affirmed their commitment to a bilateral investment pact and a free trade agreement, for which the terms of reference were finalized. Seven MoUs and agreements were signed.Muizzu had earlier invited Modi as the guest of honour for the Maldives July 26 Independence Day celebrations. India had extended a $ 800 million LoC to the Maldives in 2019 under the previous pro-India Maldivian Democratic Party (MDP) government but on this occasion the LoC is in Indian currency (Rs 4850 crore). The president said after his meeting with Modi it will be used for priority projects in defence, healthcare, education and housing. Foreign secretary Vikram Misri said Muizzu also reiterated the Maldives’ condemnation of the Pahalgam attack.Muizzu has been seen as a pro-China leader in the past because of his association with the India Out campaign while in opposition, and his insistence on driving out Indian military from the archipelago after taking over as president in November, 2023. Muizzu travelled to India in October last year for an official visit, during which he said Maldives would do nothing to hurt India’s security interests and prioritise the relationship. The leaders then also launched a Comprehensive Economic and Maritime Security Partnership to resuscitate the relationship.In his remarks, Modi said India is proud of the fact that it’s Maldives’ most reliable partner and that for India, it’s always friendship first. “To give a new impetus to our development partnership, we have decided to provide a line of credit of $ 565 million, or approximately Rs 5,000 crore, to Maldives. It will be used for projects related to infrastructure development in line with the priorities of the people of Maldives,” said Modi, calling the relationship older than history and as deep as oceans. One of the agreements signed is expected to bring down Male’s annual LoC debt repayment from $ 51 million to $ 29 million.Modi also said that both countries will soon finalise a bilateral investment treaty and their target now is “from paperwork to prosperity”, adding a local currency settlement system under discussion will also facilitate trade.There was focus on defence and security cooperation as the new defence ministry building built with Indian assistance was inaugurated. Modi called it a concrete building of trust and partnership. “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,” said the PM, adding that irrespective of the weather, India-Maldives friendship will always be bright and clear. Asked whether there was any discussion about China, Misri said in a press briefing India continued to work very closely with the Maldives on any issue that might “impinge on not just our security but our common security in this region that we share”.Modi will participate in the Independence Day celebrations on Saturday and also meet political leaders, including from the opposition. The visit also saw the leaders virtually inaugurating a roads and drainage system project in Addu city and 6 High Impact Community Development Projects in other cities. “Prime Minister handed over 3,300 social housing units and 72 vehicles for Maldives National Defence Force and Immigration authorities,” said the Indian government in a statement.