India and the Maldives have executed the Terms of Reference for a comprehensive Free Trade Agreement, codifying the foundational blueprint required to advance bilateral economic negotiations, according to the Indian Ministry of Commerce and Industry.
The milestone stems from an initial pact to commence trade deliberations formalised during a state visit by Prime Minister Narendra Modi to the Maldives last year. The core framework necessary to progress towards a finalised treaty has been successfully established, the Indian commerce ministry disclosed on 16 March. These terms of reference delineate the specific sectors and regulatory principles that will guide ongoing negotiations before a comprehensive accord is ratified. While the ministry confirmed the ultimate objective is the realisation of a full-fledged free trade agreement, officials abstained from releasing technical specifications regarding the treaty’s internal provisions.
The primary objective of the accord is to establish a robust administrative framework designed to bolster commercial opportunities and fortify the bilateral economic alliance, the Ministry of Economic Development and Trade in Malé stated. The agreement will actively dismantle trade barriers and multiply investment prospects, the ministry asserted, thereby catalysing a more sophisticated partnership between the two nations.
An anticipated surge in cross-border commerce and foreign direct investment underpins the proposed treaty. The agreement will yield tangible benefits for citizens of both nations, providing enhanced conveniences for Indian tourists in the Maldives and Maldivian expatriates residing in India, according to Maldivian trade officials. These measures are intended to allow individuals to execute commercial transactions and remit payments for goods and services seamlessly.
Diplomatic negotiations will be bolstered by the integration of modernised trade facilitation measures, specifically the implementation of the Unified Payments Interface and the consolidation of a local currency settlement mechanism, the ministry highlighted.
The advancement of the India-Maldives trade framework unfolds as the Maldives pursues a broader economic diversification strategy. The nation officially commenced the implementation of a separate Free Trade Agreement with China in January 2025. The government has also expanded its commercial horizons by signing a Preferential Trade Agreement with Turkey, an arrangement specifically designed to secure tariff concessions on targeted commodities.