Maldives and India Agree on Framework for Free Trade Agreement Talks

A framework has been established to guide negotiations on a proposed Free Trade Agreement between the Maldives and India, marking a significant step in strengthening economic cooperation between the two countries.

The decision to explore a trade agreement was formalised during the official visit of Narendra Modi to the Maldives on 25 July last year.

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

Mohamed Saeed had earlier stated on 25 May 2024 that India had proposed a Free Trade Agreement. This claim was rejected by India on 31 May, with officials clarifying that no formal proposal had been made at the time, while signalling openness to an agreement if the Maldives expressed interest.

In February this year, Minister Saeed said that both countries had demonstrated mutual interest in pursuing a trade deal during the state visit of Mohamed Muizzu to India in October last year. He added that securing Free Trade Agreements with major global markets remains a key priority of the administration, with any agreement to be structured to maximise benefits for the Maldivian economy.

Relations between the Maldives and India faced strain at the start of the current administration, which came to power on a pledge to remove Indian military personnel stationed in the country under the ‘India Out’ campaign. Tensions were further heightened following derogatory remarks made by three deputy ministers about Prime Minister Modi after the change in government.

Since then, the government has taken steps to rebuild bilateral ties. During Modi’s visit to the Maldives, several agreements were signed, including a USD 565 million Line of Credit aimed at supporting development projects in the country.