NEW DELHI—The fierce rivalry between India and China for affect within the Indian Ocean is on show within the tiny archipelago nation of Maldives, higher identified for its white sand seashores and crystal clear waters than as a strategic army outpost.

The Maldives is already awash with Chinese loans, which have helped fund new excessive rises on a synthetic island, roads and a landmark bridge. Now Indian loans and grants are behind a $500 million bridge venture connecting three islands to the capital metropolis of Malé.