In 2019, incoming travelers brought the Maldives 28% of their GDP and 60% of their foreign exchange inflows. Suffice it to say that the Maldives’ economy depends heavily on tourism and, in 2023, as much as 11% of their inbound visitors came from India. When Prime Minister Narendra Modi chose Lakshadweep as his holiday destination in January of last year, though, it was felt by some as a slight to the Maldives. Maldivian deputy minister Mariyam Shiuana took a dig at the Prime Minister on social media platform X, calling him a “puppet of Israel” and “a clown”.

Two other government officials made disparaging comments of a similar kind and, together with Shiuana, were duly suspended from their posts. However, the result was a widespread boycott of the Maldives by Indian tourists and tourist companies. STIC Travel Group, for instance, discouraged airlines from heading towards the Maldives, and EasyMyTrip declared it wouldn’t accept any more bookings for trips to the island. Efforts were made to patch up relations between the two nations, but there were very real consequences for the Maldives: Comparing 2023 with 2024, the number of Indian tourists making their way to the island dropped from 209,193 to only 130,805.

In October 2024, the Maldives were struggling to make an interest payment on a $500 million sukuk that was due to mature this year. (A sukuk is a treasury bond that gives investors partial ownership of the financed project and follows Islamic law in not paying interest.) Defaulting on a sukuk would be highly undesirable from a Maldivian point of view, potentially leading to further downgrades of the Maldives’ credit rating by international agencies like Fitch and Moody’s, which might seriously deter those considering investing in the island. It would also sour the Maldives’ reputation in Islamic finance centres in the Middle East. However, after turning to Hindu-majority India, the Maldives were able to meet the terms of their Islamic financial contract – despite the religious nature of Shiuana’s “puppet-of-Israel” slur.

Is the anti-India feeling in the Maldives of considerable proportions? Where does it come from? Join us for some answers.

Relations with China

Long pursuing greater influence in the region, China has an extended record of investing in the Maldives. Still, under former President Mohamed Solih, the Maldives’ chief loyalty lay with India. This was particularly so in the light of India’s increased program of investing in the archipelago since 2019, which outshone China and went towards airports, schools, hospitals, and other infrastructure.

The current Maldivian President, Mohamed Muizzu, and his Progressive Alliance party are known for their affection for China. Holding the reins between 2013 and 2018, the Progressive Alliance signed a free trade deal with China and Muizzu, who was mayor of the capital city Male at the time, cooperated in the construction of the China-Maldives Friendship Bridge, which links the city with the airport. In Muizzu’s more recent campaign for the presidency, the phrase “India Out” was emphasized – referring to Indian troops stationed on the island. And then, after stepping into office in September 2023, Muizzu made his first presidential visit, not to India – as would be customary – but to China, where he signed several agreements. 

In March of last year, Muizzu gleefully accepted free “military assistance” from China together with twelve ambulances. The escalation of the Maldives’ relationship with China to a military alliance was alarming for India, suggesting that Muizzu’s anti-India campaign had been more than empty words. At the same time, it didn’t make very much economic sense, prompting the University of Australia’s Azim Zahir to remark that “Muizzu is trying to move away from reliance on India, but I don’t know how far he can afford to go”.  

Sukuk Bailout

In the runup to Muizzu’s meeting with Prime Minister Modi last October, with the aim of securing assistance to avoid default on his sukuk, the president’s tone had changed dramatically. He called India “our closest neighbour, with whom we share deep historical, cultural and economic ties”. The Maldives’ net foreign exchange reserves had fallen to a low of $36 million the previous September, triggering a potential crisis for local currency. Still recovering from Covid-era travel restrictions, the Maldives’ economy was also saddled with plenty of debt due to elevated infrastructure spending. Already having handed over $100 million in short-term loans to the island the same year, Modi agreed to grant them another $357 million loan plus a $400 million currency swap.

More of the same followed in May 2025, when India agreed to roll over India’s $50 million treasury bill for another year, which constituted “crucial financial support” in the eyes of the Maldivian foreign minister Abdulla Khaleel. Khaleel went on to praise “This timely assistance” that “reflects the close bonds of friendship between Maldives and India”. 

Final Thoughts

Aside from being much closer to India than to China – 700 km as opposed to 6000 km – the Maldives is also India’s long-time trading partner. Since 2017, over 10% of Maldives’ imports have come from India. The products that make their way in that direction include pharmaceuticals, vegetables, machinery, electrical appliances, and refined petroleum. This flow of goods grew even stronger in Covid times, increasing the island’s reliance on their closest neighbour.

As to the sources of the anti-India sentiment that’s bared its face in the Maldives, many people point their fingers at foreign powers like China. For example, the former director of the Indian Cultural Centre in Maldives, Syed Tanveer Nasreen, testified that she met a local on the island who “told me that for participating in anti-India campaigns he used to get dresses, food and money”. Nasreen concluded that this proved the “influx of foreign funds aimed at escalating anti-India sentiment”. 

Has India’s financial assistance done any anything to calm those feelings? Perhaps. “There has… been a better realization of the actual role India plays inside the Maldives, including a fairly large humanitarian role”, suggests Indrani Bagchi of the Ananta Centre think tank.

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