India reportedly unsettled over China-Maldives FTA

The Indian government has reportedly acknowledged uncertainty over the Free Trade Agreement (FTA) between Maldives and China and is said to have hinted that it may have to think more about its financial aid policy.

Several years after Maldives and China signed the Free Trade Agreement (FTA) discussions on putting the agreement into action began during President Dr. Mohamed Muizzu's visit to China after he assumed power on 17th November 2023.

While the agreement came into effect on January, the Maldivian government estimates it would increase trade between both countries to USD one billion.

Indian news outlets, for the past week or so, had reported citing various Indian government sources as saying that the FTA has caused uncertainty.

However, no official comment was made from the Indian government until the question was brought up during the weekly External Affairs Ministry press conference yesterday.

Without specifically mentioning the China-Maldives FTA, spokesperson of the ministry Randir Jaiswal said the Delhi was concerned that the recent signings of revenue-stifling agreements could affect Maldives' sustainable financial position.

He also reportedly said that these matters would need to be taken into consideration when shaping India's policies.

India's signal that it may have to think twice about providing financial assistance to Maldives comes after India recently provided a USD 400 million currency swap facility to help Maldives overcome its economic and financial difficulties. A T-bill purchased through SBI India was also deferred.

Relations between the two countries deteriorated during the initial days of the incumbent government. However, ties have since been restored through high-level meetings and visits by both governments.

While the FTA between Maldives and China has come into effect as of 2025, a similar agreement was decided upon, and commencing future discussions were talked about during President Muizzu's visit to the neighbouring country.

Maldives has also signed a preferential trade agreement with Turkey.