India has offered up to US$1 billion in low-interest loans to help the Maldives repay its debt to China in exchange for a permanent military presence, the Nikkei Asian Review reported Wednesday, citing Indian government sources.

Talks are ongoing and details are expected to be worked out before President Ibrahim Mohamed Solih’s state visit on December 17, according to the sources.

The report comes at the end of a four-day official visit by Foreign Minister Abdulla Shahid to reset relations after the new administration took office on November 17.

India-Maldives ties nosedived under former president Abdulla Yameen after New Delhi expressed “deep dismay” about a state of emergency in February. The former administration’s partnership with China, which financed flagship infrastructure projects, also stoked fears of India’s loss of influence in its backyard.

According to the Indian external affairs ministry, the new Maldivian foreign minister reiterated an ‘India First’ foreign policy and assured the giant neighbour the new administration would be “sensitive towards India’s security and strategic concerns.”

India in turn assured “support in implementing [Maldives] development priorities and in ensuring fiscal and budgetary stability.”

According to the central bank, at least US$1.5 billion is owed to China, a figure that eclipses the country’s annual tax revenue. The central bank governor told parliament earlier this month that the exact amount for which sovereign guarantees were provided by the previous government was unclear.

Finance Minister Ibrahim Ameer, who accompanied the foreign minister, told Indian media that some of the Chinese-funded projects were carried out an “inflated” cost but could not be renegotiated.

Ameer said the Maldives has asked India for an increase in a US$200 million currency swap facility and immediate budgetary support of up to US$350 million.

On Tuesday, the delegation of ministers met representatives from the Confederation of Indian Industry to “discuss investment opportunities in healthcare, infrastructure, water & sewerage and other areas.”

The delegation, which also includes Economic Development Minister Fayyaz Ismail, is also due to travel to China for official meetings after visits to the UAE and Saudi Arabia.