Maldives and India Formalise Framework for Free Trade Agreement Negotiations

The Maldives and India have signed the Terms of Reference for a proposed Free Trade Agreement, marking a formal step toward deeper economic integration between the two countries. The development was disclosed by India’s Ministry of Commerce, confirming the start of structured negotiations aimed at establishing a comprehensive trade pact.

The Terms of Reference sets out the scope, structure and procedures that will guide discussions leading to a full Free Trade Agreement. While detailed provisions of the agreement have not yet been made public, the Indian Commerce Ministry stated that the objective is to conclude a broad-based FTA covering trade and economic cooperation.

The decision to initiate negotiations follows discussions held during Indian Prime Minister Narendra Modi’s state visit to the Maldives last year, where both sides agreed to explore enhanced trade collaboration.

Maldives’ Ministry of Economic Development and Trade said the framework provides an institutional basis to expand trade opportunities and strengthen bilateral economic ties. The ministry noted that the agreement is expected to reduce trade barriers and support a more enabling environment for investment flows between the two countries.

Authorities also indicated that the initiative could facilitate cross-border transactions and improve payment systems. Efforts are underway to strengthen the Unified Payments Interface and introduce local currency settlement mechanisms, which are expected to simplify payments for Indian tourists visiting the Maldives as well as Maldivians residing in India.

The move aligns with the government’s broader strategy to expand trade partnerships and diversify economic linkages. The Maldives has already concluded a Free Trade Agreement with China, which is set to take effect in January 2025, and recently entered into a Preferential Trade Agreement with Türkiye.

With the Terms of Reference now in place, negotiations between the Maldives and India are expected to progress toward defining the specific terms of market access, investment provisions and trade facilitation measures under the proposed agreement.