Maldives and India have taken a significant step toward deepening their economic partnership by signing the Terms of Reference (ToR) for a proposed Free Trade Agreement (FTA), establishing the framework for formal negotiations.
The development follows earlier commitments made during the state visit of Narendra Modi to the Maldives, where both nations agreed to initiate trade discussions. According to India’s Ministry of Commerce and Industry, the ToR outlines the scope, guiding principles, and sectors that will shape the negotiation process leading to a comprehensive trade pact.
While the agreement has not yet been finalised, the signing of the ToR marks a crucial milestone in defining how the two countries will proceed with detailed discussions. Officials have not disclosed specific technical provisions but confirmed that the ultimate objective is to establish a full-fledged Free Trade Agreement.
Maldivian authorities highlighted that the proposed accord aims to strengthen bilateral economic ties by reducing trade barriers, enhancing investment flows, and creating a more structured framework for commercial cooperation. The Ministry of Economic Development and Trade in Malé noted that the agreement is expected to unlock new business opportunities and facilitate smoother trade between the two countries.
The anticipated FTA is also expected to deliver practical benefits for individuals. Indian tourists visiting the Maldives and Maldivians residing in India are likely to experience improved ease in conducting financial transactions, particularly with the planned integration of modern payment systems such as the Unified Payments Interface (UPI) and potential local currency settlement mechanisms.
In addition to boosting trade, the agreement is projected to encourage increased foreign direct investment and expand cross-border commerce, further reinforcing economic collaboration between the two nations.
This initiative comes as the Maldives continues to broaden its international trade strategy. The country has already implemented a separate Free Trade Agreement with China in early 2025 and has also signed a Preferential Trade Agreement with Turkey to secure targeted tariff concessions.
With multiple trade partnerships underway, the Maldives is positioning itself to diversify its economy and strengthen its role in regional and global trade networks.
