Seychelles has called off a deal that would have allowed India to invest $550 million (Rs 3,760 crore) in building a military base on one of its islands, The Times of India reported on Sunday. President Danny Faure made the announcement on June 4, three weeks before his scheduled visit to India.

Faure said he will not discuss the topic with Prime Minister Narendra Modi on his state visit, the Seychelles News Agency reported on June 5. “In next year’s budget, we will put funds for us to build a coast guard facility on Assumption [the island where the military base was to be built] ourselves,” Faure said. “It is important for us to ensure that we have a military post in this area.”

Faure will visit New Delhi on June 25.

Meanwhile, India has sought a clarification from Faure on his statement, unidentified officials told The Indian Express. Seychelles funding its own coast guard facility is not a problem, but India wants to stay in the project as it is crucial to its strategic interests, with China’s growing influence in the area, officials said.

“We have put in three years of negotiations into the agreement to develop infrastructure on the island,” an official told the newspaper. “It is crucial for Seychelles to protect its maritime domain, and it is key to India due to its strategic location in the western periphery of the Indian Ocean. We need to know what the Seychelles establishment has in mind about the future of the project.”

The pact

The pact with Seychelles was first announced during Narendra Modi’s visit to the strategic Indian Ocean archipelago nation in 2015. The deal faced hurdles and former Foreign Secretary S Jaishankar had to make an unannounced visit to Seychelles in October 2017 to resolve the differences. He visited the country again in January to sign the renegotiated agreement.

In March, copies of the classified agreement were leaked online, with allegations that the Seychelles government had “sold off” Assumption island to India. The opposition coalition, which holds a majority in the Seychelles Parliament, had opposed the pact. The deal could not have gone through without its support.

Foreign Secretary Vijay Gokhale then visited Seychelles in May but was reportedly unable to revive the deal, according to The Times of India.

The deal would have helped India ensure the safety of its vessels in the southern Indian Ocean. Indian soldiers would also have been deployed on Assumption island.