The Indian Ministry of External Affairs (MEA) has stated that no formal proposal has been made for a bilateral free trade agreement (FTA) with the Maldives.
During a weekly briefing, MEA official spokesperson Randhir Jaiswal addressed the matter, responding to a question about an FTA with the Maldives. Jaiswal clarified, “No specific proposal for a bilateral FTA with the Maldives has been made by the Government of India.” He added that if the Maldives showed interest in such an agreement, India would consider it.
Background
This statement follows comments from Maldives’ Economic Development and Trade Minister, Mohamed Saeed, who claimed that India had shown interest in creating an FTA with the Maldives. Saeed mentioned that India wanted to enhance the existing South Asian Free Trade Agreement (SAFTA) with a bilateral FTA. He also noted that the Maldives president had extended the opportunity for FTAs to all countries to facilitate trade activities.
“They (India) want there to be a Free Trade Agreement with (the) Maldives, in addition to SAFTA (South Asian Free Trade Agreement),” Mohamed Saeed said.
The discussion about the FTA comes amidst diplomatic tensions between India and the Maldives. Since President Muizzu’s inauguration last November, relations have been strained due to his pro-China stance. Shortly after taking office, President Muizzu demanded the withdrawal of Indian military personnel from the Maldives, which was completed earlier this month.
Bilateral Trade Between India and the Maldives
Despite the absence of an FTA, trade between India and the Maldives has been robust. The 1981 India-Maldives trade agreement allows for the export of essential commodities. In 2021, bilateral trade exceeded USD 300 million and surpassed USD 500 million in 2022, according to the Indian High Commission.
The Maldives previously signed an FTA with China during President Abdulla Yameen Abdul Gayoom’s administration. However, this agreement was later criticized and not upheld by his successor, President Ibrahim Mohamed Solih. With President Muizzu now in office, the FTA with China has regained momentum. The current administration is ready to honour the agreement, seeing it as a sign of strong relations between the Maldives and China.
Despite recent diplomatic issues, India has shown goodwill towards the Maldives. In May, India announced the extension of vital budgetary support to the Maldivian government by rolling over a US$50 million Treasury Bill for another year at the Maldives’ special request.