New Delhi, Jan 31 (Agency) India today flagged its concerns over the Maldives-China FTA and added that New Delhi “would obviously need to take that into account” while framing its own policies. Ministry of External Affairs spokesperson Randhir Jaiswal said at a briefing: “We remain in close touch with Maldivian authorities on the situation facing them. “Recent agreements that are likely to result in revenue loss for the Maldives Government are, obviously, a matter of concern and do not bode well for the long term fiscal stability of the country. “We would, obviously, need to take that into account while framing our own policies.”
The China-Maldives Free Trade Agreement under which both nations will benefit from reduced tariffs and improved market access commitments, came into effect on January 1. The FTA aims to enhance trade volumes, increase exports, increase productive capacity, reduce trade barriers, and create new opportunities for businesses in both Maldives and China. The MEA spokesperson’s comments come amid reports that the Indian government is reconsidering its financial aid to the Maldives after the latter went ahead and decided to implement the FTA with China. Male’s move came a month after New Delhi announced financial aid to the Maldives to help it recover from the economic crisis. According to reports, the Maldives-China FTA will lead to revenue losses to Male and also result in trade imbalance in the region. Maldives is likely to lose around $30-40 million per annum in customs fees due to the FTA.
Maldives has also agreed to a trade agreement with Turkey, resulting in similar custom revenue losses. India provided budgetary support to the Maldives by extending the rollover of a $50 million Treasury Bill for another year at the request of the Maldivian government. This marked the second such rollover by India. In October 2024, India agreed to provide substantial financial support to the Maldives to bolster its ailing economy. The package includes a $400 million currency swap deal, along with an additional 30 billion rupees ($357 million) in another swap arrangement, enabling businesses to conduct transactions in local currencies instead of US dollars.