India has announced a financial package of almost £400 million for the Maldives as New Delhi tries to mitigate growing Chinese influence in the Indian Ocean region.

The money will pay for bridges and causeway links to connect the island of Male, home to the capital of the same name, with three outlier islands, as part of the largest infrastructure project in the Maldives’ history.

The Maldives owes Beijing approximately £1 billion after its former President Abdulla Yameen accepted a series of soft loans from China to embark on development projects. While this debt repayment has been partially waived by for four years, Beijing is still able to wield considerable influence over Maldivian domestic politics.

China has leased the island of Feydhoo from the Maldives until 2066 and has since admitted to building a military base there as its “natural right as a sovereign nation”. In the nearby disputed South China Sea, China has dredged sand from the ocean floor to construct strategic islands and on Feydhoo it has allegedly increased its size from 38,000m² to 100,000m².

The debt incurred and the development on Feydhoo caused alarm for the Maldives’ current leader, President Ibrahim Solih, who is trying to pivot back to the country’s historic ally of India and has agreed £1.5 billion worth of loans with New Delhi since he was elected in 2018.

New Delhi will now provide a grant of £76 million and a line of credit of around £300 million to connect Male with the islands of Villingili, Gulhifahu, and Thilafushi.

The Maldives is building a new port on Gulhifahu and an industrial zone on Thilafushi and the funding will also set up a direct ferry service between the islands and India to boost trade.

Meanwhile, the Indian Navy will reinforce and step up its patrols in the Indian Ocean to counter the increased Chinese presence in the region.

The nearby Strait of Malacca is of vital strategic importance to China, which imports 80 percent of its oil through the narrow stretch. Tensions between the two Asian superpowers remain high after Beijing annexed at least 60 kilometres of disputed Indian territory in Ladakh in May.