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Minister of Economic Development and Trade Mohamed Saeed and India's Minister of External Affairs Dr. S. Jaishankar exchange the signed Memorandum of Understanding (MoU) to advance the proposed India-Maldives Free Trade Agreement (IMFTA). The agreement is expected to strengthen bilateral trade, investment and economic cooperation between the two countries. Photo: President's Office

MALE', Maldives – The Maldives is working to bring the proposed India-Maldives Free Trade Agreement (IMFTA) into force this year, with the government saying the agreement will create new opportunities for trade, investment and small and medium-sized enterprises (SMEs) while strengthening economic ties between the two countries.

The update follows the signing of a Memorandum of Understanding (MoU) between the Maldives and India to advance the implementation of the proposed agreement. The MoU was signed by Minister of Economic Development and Trade Mohamed Saeed on behalf of the Maldivian government and India's Minister of External Affairs Dr. S. Jaishankar on behalf of the Indian government.

According to the Ministry of Economic Development and Trade, the proposed FTA will establish a comprehensive framework to strengthen bilateral trade, reduce trade barriers, improve market access and encourage investment between the two countries.

Minister Saeed said the government aims to bring the agreement into effect this year, describing it as a key part of the Maldives' strategy to diversify its economy and reduce its reliance on a limited number of sectors.

"India is the Maldives' largest trading partner and one of the world's largest consumer markets. Once the agreement comes into force, Maldivian products will have easier access to this rapidly expanding market," Saeed said.

He said the agreement is expected to particularly benefit fisheries products, value-added food processing and other locally manufactured goods, while opening new opportunities for businesses operating in the creative economy, e-commerce and digital services.

According to the minister, SMEs—including youth-led, women-led and home-based businesses—are expected to be among the biggest beneficiaries through improved access to India's vast consumer market.

Saeed stressed that the agreement extends beyond reducing customs duties. It is also expected to simplify trade by introducing digital documentation, faster customs clearance and fewer administrative barriers, reducing business costs and improving trade efficiency. Technical cooperation and technology transfer under the agreement are also expected to strengthen productivity in the Maldives.

The ministry said the FTA is expected to facilitate smoother business transactions and payment systems for Indian tourists visiting the Maldives and Maldivian citizens residing in India. Trade facilitation measures, including India's Unified Payments Interface (UPI)

and strengthened local currency settlement mechanisms, are expected to complement the agreement.

The minister identified value-added fisheries and food processing, digital services and financial technology (fintech), renewable energy, healthcare, logistics, tourism and education as sectors likely to benefit from increased investment once the agreement takes effect.

He said the government is consulting stakeholders from key sectors, including fisheries, tourism, construction, aviation and healthcare, to ensure the agreement protects the Maldives' national interests.

The Ministry said the FTA will mark a new chapter in Maldives-India economic relations by promoting sustainable economic growth, increasing market access and improving trade efficiency for both countries. It is also expected to strengthen the Maldives' economic resilience by expanding trade opportunities and reducing vulnerability to global economic shocks.

The Maldives and India agreed to pursue a bilateral Free Trade Agreement during President Dr. Mohamed Muizzu's state visit to India in October 2024. The Maldives already has a Free Trade Agreement with China, and once the agreement with India enters into force, the country will have preferential trade arrangements with two of the world's largest consumer markets.