Maldives’ Free Trade Agreement with China Triggers Fight with India

President of the Maldives, Mohamed Muizzu (L) shakes hands with Indian Prime Minister Narendra Modi during Muizzu's first state visit to India in October. (Photo by Money SHARMA / AFP)

India is reportedly reconsidering an aid package aimed at stabilizing the economy of the Maldives because the island nation signed a free trade agreement (FTA) with China. The Indian press reported that New Delhi feels President Mohamed Muizzu didn’t push through sufficient economic reforms. The FTA with China will also lead to around $40 million in lost customs fees. A similar recent deal with Türkiye could have the same effect.

India extended the repayment window of a $50 million treasury bill and provided about $757 million in currency swaps last year to support the Maldivian economy. It’s unclear how the withdrawal of the aid will affect its recovery. Confusingly, India is also pursuing its own FTA with the Maldives, with leaders agreeing to start these talks during Muizzu’s visit to India last year.

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by CGSP Staff

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