India’s Financial Aid to Maldives Under Review Amid China Trade Agreement
Photo credits: The President’s Office
The Indian government has indicated that it may need to reassess its financial assistance policy towards the Maldives, citing uncertainty surrounding the Free Trade Agreement (FTA) between Maldives and China.
Following years of negotiations, discussions on implementing the Maldives-China FTA began after President Dr Mohammed Muizzu took office on 17 November 2023 and subsequently visited China in January 2024. The agreement, which took effect this January, is expected to increase trade between the two countries to USD 1 billion, according to the Maldivian government.
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Over the past week, Indian news outlets have reported that the FTA has raised concerns among Indian government officials. However, the Indian government had not made an official statement until the country’s Ministry of External Affairs (MEA) addressed the issue during a weekly press briefing.
At the briefing, MEA spokesperson Randhir Jaiswal, without directly naming the China-Maldives FTA, stated, “We remain in close touch with Maldivian authorities on the situation facing them. Recent agreements that are likely to result in revenue loss for the Maldives Government are, obviously, a matter of concern and do not bode well for the long-term fiscal stability of the country. We would, obviously, need to take that into account while framing our own policies.”
#WATCH | Delhi: On Maldives, MEA Spokesperson Randhir Jaiswal says, "We remain in close touch with Maldivian authorities on the situation facing them. Recent agreements that are likely to result in revenue loss for the Maldives Government are, obviously, a matter of concern and… pic.twitter.com/lo74WuBopZ— ANI (@ANI) January 31, 2025
India had recently provided a USD 400 million currency swap facility to assist the Maldives in overcoming economic and financial difficulties. Additionally, a T-bill purchased through the State Bank of India (SBI) has been deferred. Relations between the two countries saw tensions during the initial days of President Muizzu’s administration but have since stabilised through high-level engagements and diplomatic visits.
While the FTA with China has come into force, President Muizzu has also decided to initiate negotiations on a similar agreement with India, following his first official visit to the country last year. Additionally, the Maldives has signed a preferential trade agreement with Türkiye as part of its broader economic strategy.
