India has raised its financial support to the Maldives for the 2025-26 fiscal year, increasing the amount from Rs 400 crore (USD 48 million) to Rs 600 crore (USD 72 million). This move reflects India’s renewed efforts to strengthen its ties with the Maldives, which has been reassessing its diplomatic relations under President Mohamed Muizzu. The increase in aid comes amid efforts by the Maldivian government to recalibrate its relationship with India, following a period of diplomatic tensions.
This increase in financial assistance follows a significant shift in the dynamics between the two nations, particularly after India withdrew its military personnel from the Maldives earlier this year. This withdrawal was in response to President Muizzu’s campaign promise to remove foreign military forces from the country, initially signaling a potential tilt towards China. However, recent developments indicate a return to closer cooperation between India and the Maldives.
In a sign of improving relations, Maldivian Defence Minister Ghassan Maumoon visited India earlier this month, signaling a commitment to rebuilding military and strategic cooperation. His visit is part of ongoing discussions aimed at strengthening regional security, economic development, and infrastructure projects.
The increase in aid is part of India's broader foreign assistance strategy under its 'Neighbourhood First' policy, with Rs 5,483 crore (USD 658 million) earmarked for foreign aid in the upcoming fiscal year. Of this, Rs 4,320 crore (USD 518 million) is designated for neighboring countries, with a focus on infrastructure, power transmission, and connectivity projects.
India's largest recipient of aid continues to be Bhutan, which will receive Rs 2,150 crore (USD 258 million), followed by Nepal, which will get Rs 700 crore (USD 84 million). Sri Lanka’s aid has also increased, now totaling Rs 300 crore (USD 36 million) as it works to recover from an economic crisis.
India’s decision to increase financial support to the Maldives underscores the importance of maintaining stable bilateral relations, particularly as both countries address regional security challenges and seek economic cooperation. While initial diplomatic tensions followed President Muizzu’s election, the recent series of high-level engagements suggests a pragmatic approach to restoring ties. As both nations continue to navigate regional issues, India’s increased financial commitment could lead to deeper collaboration in the future. However, the real impact of this aid and its potential influence on political alignment will become clearer with time.