India-Maldives ink framework for FTA negotiations

A framework has been put in place to guide negotiations on a proposed Free Trade Agreement (FTA) between India and the Maldives.

The decision to explore an FTA was formalized during the official visit of Indian Prime Minister Narendra Modi to the Maldives on July 25 last year.

On Monday, India’s Ministry of Commerce announced that, as part of its broader push to expand trade partnerships, the country is currently negotiating trade agreements with six nations. The Ministry confirmed that the Terms of Reference (ToR) for the agreement with the Maldives have now been signed, outlining the sectors to be covered and the procedures that will guide the negotiations.

Economic Minister Mohamed Saeed had stated on May 25, 2024, that India proposed a Free Trade Agreement. However, India rejected this claim on May 31, clarifying that no such proposal had been made at the time, while indicating openness to considering an agreement if the Maldives expressed interest.

Later, in February this year, Minister Saeed said that during President Mohamed Muizzu’s state visit to India in October last year, both leaders had shown mutual interest in pursuing an FTA.

He further stressed that securing Free Trade Agreements with major global markets remains a key priority for the President, adding that any such agreements would be carefully structured to maximize benefits for the Maldivian people.

Notably, the current administration came to power on the promise of the removal of Indian military personnel stationed in the Maldives under its ‘India Out’ campaign, as the opposition during the last administration. This created tensions between the two friendly nations at the onset of the current administration which followed through the pledge.  Relations between the two countries later deteriorated after three deputy ministers made derogatory remarks about Prime Minister Modi following the change in government.

Since then, the administration has made significant efforts to rebuild and strengthen bilateral ties with India.

During Prime Minister Modi’s visit to Maldives, several key agreements were signed, including a USD 565 million Line of Credit aimed at supporting development projects in the Maldives.