New Maldives government has categorically denied reports that it was planning to allow the establishment of an Indian military base in the archipelago in exchange for financial assistance or other material benefits.
India is in talks with the Maldives, offering low-interest loans over several installments in exchange for stronger security ties, including the permanent deployment of Indian military personnel in the island nation, according to Indian government sources quoted by the country's media.
The countries were reportedly expected to iron out the details before new Maldives president Ibrahim Mohamed Solih, who took office earlier this month visits India in December.
Maldives foreign ministry in a statement however, quickly denied the reports insisting that it were "baseless."
"The allegations are baseless, and aimed at discrediting the efforts of the Government as it starts to rebuild good relations with its neighbours and the rest of the international community," the statement read.
"The Government assures the Maldivian people, that it will always act in the national interest of the Maldives, and will not undertake any international engagement that will compromise the sovereignty and independence of the country."
The island nation has amassed billions in debt to China to fund mega development projects initiated by former Maldives president Abdulla Yameen Abdul Gayoom.
Beijing has provided grant and loans to fund several major infrastructure projects including a landmark bridge connecting the capital Male to the airport island Hulhule.
Maldivian Foreign Minister Abdulla Shahid and Indian External Affairs Minister Sushma Swaraj agreed to cooperate on economic and security issues at a Monday meeting in New Delhi.
Shahid "reiterated that the government of Maldives will be sensitive towards India's security and strategic concerns," the Indian Foreign Ministry said in a statement, adding that India supports the Maldives "in ensuring fiscal and budgetary stability."
Shahid’s visit comes just over a week after Prime Minister Narendra Modi attended Solih’s swearing-in ceremony.
The visit is Modi's first to the Maldives after years of tense relations between the two countries because of Solih's predecessor's embrace of China during his tenure.