The Indian government has reportedly expressed uncertainty over the Free Trade Agreement (FTA) between Maldives and China, hinting that it may need to reconsider its financial aid policy toward the Maldives.
Several years after the Maldives and China signed the FTA, discussions on its implementation gained momentum following President Dr. Mohamed Muizzu's visit to China after assuming office on November 17, 2023. The agreement officially came into effect in January 2025, with the Maldivian government estimating that trade between the two nations could reach USD 1 billion.
For the past week, Indian news outlets have reported that government sources in India view the FTA as a cause for concern. However, the Indian government had not made an official statement until the issue was raised during the External Affairs Ministry’s weekly press conference. Ministry spokesperson Randir Jaiswal, without directly mentioning the China-Maldives FTA, stated that Delhi was concerned about recent revenue-stifling agreements, which could impact the Maldives' financial sustainability. He further indicated that these factors would need to be considered when shaping India’s future policies.
India's indication that it may rethink its financial assistance to the Maldives comes after it recently provided a USD 400 million currency swap facility to support the country’s economy. Additionally, a T-bill purchased through the State Bank of India (SBI) for the Maldives was deferred.
Relations between India and the Maldives initially deteriorated after the new government took office but have since improved through high-level meetings and diplomatic engagements. Alongside the FTA with China, the Maldives has also signed a preferential trade agreement with Turkey and has expressed interest in pursuing similar agreements in the future.