India and Maldives have entered a transformative phase in their bilateral relations as Prime Minister Narendra Modi visited Male and held in-depth discussions with Maldivian President Mohamed Muizzu on July 25, 2025. A key outcome of the visit is the extension of a substantial Line of Credit (LoC) worth ₹4,850 crore from India to Maldives, alongside the official announcement of negotiations for an India-Maldives Free Trade Agreement (IMFTA).
Strengthening Strategic Ties Through Economic Cooperation
In a major diplomatic step forward, both leaders highlighted their commitment to boosting trade, strengthening defence cooperation, and enhancing infrastructure development. Prime Minister Modi reiterated India’s firm support towards Maldives’ growth and security, stating that the new Line of Credit will not only support current infrastructure projects but also encourage new bilateral ventures.
Additionally, India has decided to ease Maldives’ annual debt servicing obligations under earlier GoI-funded credit lines, providing crucial financial breathing space to the island nation.
A New Chapter with the Free Trade Agreement
The announcement of IMFTA negotiations marks a significant evolution in India-Maldives economic engagement. President Muizzu emphasized the importance of this agreement in expanding market access, streamlining trade processes, and creating new business opportunities for both countries.
This move is expected to bring structural transformation to Maldives’ economy, while also cementing India’s role as a trusted regional partner. The proposed FTA will likely focus on sectors like tourism, fisheries, renewable energy, digital connectivity, and logistics.
Defence and Infrastructure – The Twin Pillars of Partnership
Beyond economic cooperation, the Modi-Muizzu meeting emphasized shared regional security interests. India reaffirmed its willingness to strengthen the Maldives’ defence capabilities. Several infrastructure projects funded by India are also poised to gain momentum, including port development, housing, and health infrastructure.
Modi’s visit signals a reset in the diplomatic tone between the two nations, which had recently experienced a dip in engagement. This renewed partnership is expected to contribute positively to the stability and prosperity of the Indian Ocean region.



