India Seeks Free Trade Agreement with Maldives Amid Diplomatic Tensions

  • World
  • Business
PUBLISHED 29 May 2024

In a recent development, India has initiated efforts to establish a Free Trade Agreement (FTA) with the Maldives, supplementing the existing South Asian Free Trade Agreement (SAFTA). Maldives' Minister of Economic Development and Trade, Mohamed Saeed, announced this during a press conference in Male on May 25.

According to Minister Saeed, India is keen on forming a bilateral FTA with the Maldives. This move aligns with the Maldives' broader strategy to enter trade agreements with multiple countries to facilitate easier trade activities. President Muizzu has extended this opportunity to all nations, aiming to bolster the country's economic ties globally.

This initiative from India comes amidst a diplomatic row that began in November last year, following President Muizzu's inauguration. Known for his pro-China stance, President Muizzu called for the withdrawal of Indian military personnel from the Maldives immediately after taking office. The transition was completed earlier this month, with Indian military personnel being replaced by civilians.

The trade relationship between India and the Maldives dates back to a 1981 agreement that allows for the export of essential commodities. Bilateral trade between the two nations has grown significantly, surpassing $300 million in 2021 and reaching $500 million in 2022, according to the Indian High Commission.

Despite the absence of an FTA, India has already granted trade concessions on several products to the Maldives. Minister Saeed, as reported by news portal, highlighted these concessions but did not provide further details about his recent high-level meeting with Indian High Commissioner Munu Mahawar. The discussions reportedly focused on enhancing cooperative ties across multiple sectors.

Historically, the Maldives signed an FTA with China during former President Abdulla Yameen Abdul Gayoom's tenure. This agreement has gained renewed importance with President Muizzu's administration, reflecting the Maldives' strategic balancing of its trade relationships with major regional powers.

India's push for an FTA with the Maldives signals a significant step towards deepening economic cooperation, even as the two countries navigate their complex diplomatic relationship.