New Delhi is apparently reconsidering the financial aid that India had pledged for the Maldives to help the island nation recover from its economic crisis, about a month after it was first disclosed. According to a report, the action was taken after the government of President Mohamed Muizzu advanced the free trade agreement with China.

According to a report by the Economic Times, the Free Trade Agreement (FTA) between the Maldives and China is expected to result in revenue losses for the island nation and create an imbalance in regional trade. The Maldives is likely to lose about $30-40 million every year in customs fees owing to this agreement. In addition to this, the Maldives has also signed a trade deal with Turkey, which will lead to similar losses in customs revenue. India has provided immediate relief to the Maldives, but there are concerns about the country's long-term ability to manage its debt. These worries stem from the lack of clarity about the Maldives' debt situation and the absence of significant economic reforms under President Mohamed Muizzu, as reported by ET.

In September of last year, the Indian High Commission in the Maldives reported that India had extended the rollover of a $50 million Treasury Bill for an additional year at the Maldivian government's request, thereby providing budgetary help to the Maldives. After a similar extension in 2023, this was India's second rollover of this kind in May 2024.  In October 2024, India committed to offer significant financial help to the Maldives to strengthen its struggling economy. The support includes a $400 million currency swap deal, along with an extra 30 billion rupees (around $357 million or £273 million) in another swap arrangement. This will allow businesses to carry out transactions using their local currencies instead of relying on US dollars.

Despite India's considerable contribution to the Maldives, observers believe the Muizzu government has not done enough to boost the country's economy. During President Muizzu's October visit to India, the two nations decided to start negotiating a Free Trade Agreement (FTA) that would concentrate on trade in products and services.