India has initiated efforts to establish a Free Trade Agreement (FTA) with the Maldives, as confirmed by Maldivian Minister of Economic Development and Trade, Mohamed Saeed. Addressing a press conference in Male, Saeed highlighted that discussions regarding the Free Trade Deal are currently underway.
“They (India) want there to be a Free Trade Agreement with the Maldives, in addition to SAFTA (South Asian Free Trade Agreement),” Mohamed Saeed stated, according to news agency PTI. He mentioned that Maldives President Mohamed Muizzu has extended the opportunity for a free trade deal to all countries, aiming to ease trade activities through multiple agreements.
This move to seek a free trade deal comes amid strained diplomatic relations between India and the Maldives. Tensions have been high since November last year, following several Maldivian ministers’ online remarks mocking Indian Prime Minister Narendra Modi’s visit to Lakshadweep. The diplomatic skirmish was further fueled by President Muizzu’s pro-China stance and his directive for Indian troops to leave the Maldives. The last of the Indian military personnel were replaced by civilians earlier this month.
The existing 1981 India-Maldives trade agreement has been instrumental in facilitating the export of essential commodities. Data from the Indian High Commission revealed that bilateral trade between India and the Maldives surpassed $300 million for the first time in 2021 and exceeded $500 million the following year.
Despite the diplomatic discord, India demonstrated goodwill in May by extending vital budgetary support to the Maldivian government. This support included the rollover of a $50 million Treasury Bill for another year at the special request of the Maldivian government. The initiative to forge a Free Trade Deal signifies India’s commitment to strengthening economic ties with the Maldives, notwithstanding recent tensions.