In a move to restore its waning influence in Archipelago nation, India has agreed to provide $1.4 billion financial assistance to the Maldives.
The financial aid will come in the form of budgetary support, concessionary loans and a currency swap.
But analysts have warned that the Maldives’ precarious financial situation means it will remain somewhat dependent on China, to which it is heavily indebted.
The offer came as Indian prime minister Narendra Modi rolled out the red carpet for Ibrahim Mohamed Solih, the Maldivian president, who is on his first overseas visit since his shock election victory three months ago.
Mr Solih stunned political observers in September when he defeated Abdulla Yameen, who as Maldives’ president had grown increasingly hostile to India and forged closer ties with China.
The Maldives is one of several Indian Ocean nations, including Sri Lanka and Mauritius, where India is vying with China for influence, as they seek to entrench their maritime power.
Since his victory, Mr Solih has repeatedly expressed his desire to rebalance the Maldives’ foreign relations, and restore the island nation’s traditionally close ties with India.
Speaking at a business forum in New Delhi ahead of a meeting with Mr Modi, Mr Solih said: “India is our closest neighbour and our people are bound by ties of friendship and cultural affinity.’’
“India is not only our closest friend, it is also one of our largest trading partners.”
Mr Modi in a press statement pledged New Delhi’s support for the Maldives. “India is always with you,” he said.
“The security of our two countries is interlinked.”
Beijing has in recent years built a 2km bridge from the Maldives’ main airport to its capital, Malé, a journey that could previously only be made by boat.
It has also forged a free trade deal and taken long-term leases on several small Maldivian islands.
Read more: Financial Times