In a move that could shake up South Asian geopolitics, India is reconsidering its financial aid to the Maldives after the island nation signed a Free Trade Agreement (FTA) with China and Turkey. The decision has sparked speculation about India’s next course of action, as New Delhi has long been a key financial supporter of the Maldivian economy.
India’s Aid to Maldives: A History of Support
For years, India has played a crucial role in stabilizing the Maldivian economy, providing loans, grants, and financial assistance for infrastructure, education, and healthcare projects. During the COVID-19 pandemic, India extended a $250 million aid package to help the Maldives stay afloat. However, with the new FTA with China, India is now reassessing its economic relationship with its island neighbor.
China’s Growing Influence in the Maldives
The Maldives signing an FTA with China signals a major shift in its foreign policy. China’s Belt and Road Initiative (BRI) has already made deep inroads into the Maldives, with major Chinese-backed projects including bridges, housing complexes, and roads. The FTA gives China even greater access to Maldivian markets, raising concerns in New Delhi about Beijing’s expanding influence in the Indian Ocean region.
Will India Cut Off Financial Assistance?
Sources indicate that India is considering reducing or even halting financial aid to the Maldives, especially after recent tensions between the two countries. New Delhi is closely watching how the Maldives navigates its growing ties with China and Turkey.
Indian policymakers are debating whether to limit future investments, delay loan disbursements, or reduce trade incentives for the Maldives. This could be a strategic move to counterbalance China’s increasing presence in the region.
Maldives’ Risky Gamble: What Lies Ahead?
While the Maldivian government sees closer ties with China as an economic boost, experts warn that excessive reliance on Beijing could lead to a debt-trap scenario, similar to Sri Lanka’s economic crisis. If India withdraws its support, the Maldives may find itself in a difficult position, struggling to maintain economic stability.
What’s Next?
India is expected to make a formal decision on its financial aid policy for the Maldives soon. Meanwhile, diplomatic experts believe that Malé’s balancing act between India and China may not be as easy as it seems.
With China’s growing influence in the Indian Ocean and India’s cautious response, the coming months will determine whether this small island nation can maintain its independence or become another pawn in the great power rivalry.