
The new facility in Seychelles, north of Madagascar, will include an airbase as well as naval installations.
The structure will be located at a key strategic chokepoint between major global shipping lanes, which are used to transport nearly half of the world’s oil supply every day.
Tensions are already running high between Beijing and New Delhi as the two nations wrestle for more influence over the Maldives.
The rivalry has escalated after Maldivian President Abdulla Yameen signed up to China’s Belt and Road initiative which will see the Asian superpower plough billions of dollars into new trade infrastructure.
And as the spat between the two nations continued this month, 11 Chinese warships sailed into the East Indian Ocean in a massive show of force.

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The new military base on Assumption Island in Seychelles is expected to be used as a staging post for the Indian navy, allowing ships to refuel and refit hundreds of miles from their home base.
Announcing the plans, Indian Foreign Secretary Subrahmanyam Jaishankar said: “This agreement reinforces our commitment to not only further deepen India-Seychelles relations but to also take our partnership to another level.”
Last month, India signed a 20-year agreement allowing its military to build a runway, hangers and naval facilities on the island.
India has already provided Seychelles with military aircraft, helicopters, and naval boats.
The nation has also set up a high-tech coastal surveillance radar system on one of the islands to carry out intelligence gathering activities.
Throughout the years, the waters around Seychelles have seen a heavy Indian presence, with warships frequently carrying out anti-piracy patrols.
Senior Indian naval officials have stated that the development of military installations on Seychelles is to offset China’s maritime Silk Road strategy, part of its Belt and Road initiative, in the Indian Ocean.