New Delhi: India and the Maldives are in advanced talks to establish a Free Trade Agreement (FTA) and an Investment Protection Pact, in a move aimed at deepening their economic, strategic, and regional cooperation. The development was confirmed on Tuesday by Indian Foreign Secretary Vikram Misri, signaling a significant expansion of bilateral relations between the two Indian Ocean neighbors.
The potential agreements currently under negotiation are set to provide a structured framework for enhanced trade liberalization and increased foreign direct investment, particularly in sectors such as renewable energy, tourism, fisheries, and infrastructure. If finalized, this would mark the first comprehensive FTA between the two countries, offering duty concessions, reduced trade barriers, and greater legal certainty for investors on both sides.
Misri, speaking ahead of Prime Minister Narendra Modi’s upcoming state visits to London and Malé, emphasized that the negotiations are part of India’s broader strategy to solidify regional partnerships amid growing geopolitical competition in the Indo-Pacific region. “The discussions reflect our shared vision for economic integration, development, and mutual prosperity,” he stated.
The Maldives government, under President Mohamed Muizzu, had formally proposed an FTA framework to India in mid-2024, citing its alignment with broader South Asian Free Trade Area (SAFTA) objectives. The Maldives seeks greater Indian investment in infrastructure and development sectors, while India is exploring ways to boost exports of pharmaceuticals, food products, machinery, and green technologies.
Currently, India is one of the Maldives' largest development partners, financing critical infrastructure projects such as the Greater Malé Connectivity Bridge and various sanitation, housing, and power supply ventures. Earlier this year, New Delhi extended a $100 million line of credit to support clean water and urban development across Maldivian islands.
A major feature of the proposed FTA is a roadmap for collaboration in renewable energy and climate resilience areas of increasing importance to both countries. The Maldives, facing rising sea levels and climate-related vulnerabilities, has expressed interest in Indian expertise and technology to transition towards sustainable energy models.
Meanwhile, the investment protection agreement under discussion would offer legal safeguards to Indian and Maldivian businesses, ensuring transparent dispute resolution, fair treatment, and secure property rights. This could pave the way for long-term investor confidence and cross-border joint ventures.
Despite the enthusiasm, analysts note potential challenges. The Maldives remains cautious about over-dependence on a single foreign power and must balance domestic political sensitivities, especially amid opposition concerns about sovereignty and revenue loss from reduced tariffs. For India, safeguarding domestic industry while facilitating greater imports from the Maldives will require nuanced negotiations.
Highlighting the significance of the initiative, Father Angelos Sebastian, Vicar General of the Diocese of Orange, previously referred to the symbolic strength of community-led development mirroring the spirit of cooperation in broader India-Maldives ties. “When nations work together for shared progress, they create a legacy of peace and prosperity,” he said in a separate context that resonates with the spirit of the current partnership.
If concluded, the India-Maldives Free Trade and Investment Pact will become a pivotal diplomatic milestone, further anchoring India’s maritime neighborhood policy and giving the Maldives a stronger foothold in regional economic frameworks. Both sides are hopeful that the negotiations will culminate in a formal agreement by the end of 2025, ushering in a new chapter of strategic and economic collaboration.