Unlocking Opportunity: PM Modi’s Maldives Visit Could Spark New Economic Era with FTA Discussions

India and Maldives: A Potential Game Changer in Trade

India and the Maldives are looking to strengthen their ties with a new free trade agreement (FTA) and investment treaty. This announcement came just before Prime Minister Narendra Modi’s visit to the Maldives on July 25-26, which marks an important milestone: the 60th anniversary of diplomatic relations between the two nations.

Modi’s visit, at the invitation of President Mohamed Muizzu, underlines the importance of their partnership. The Prime Minister aims to enhance their collaboration on economic and maritime security, key areas for both countries.

Foreign Secretary Vikram Misri shared that India is a vital trading partner for the Maldives, with bilateral trade nearing $500 million. He noted India’s role in sectors like tourism and health, indicating that Indian investments are already present in the Maldives. The proposed FTA aims to make Indian goods more affordable by reducing tariffs. This could also encourage greater tourism as travel restrictions may ease.

The potential investment treaty could bring Indian businesses into important areas like tourism, fisheries, and renewable energy. Projects like the Greater Male Connectivity Project, designed to link several islands, highlight how India is contributing to the Maldives’ infrastructure, helping to boost local economies.

However, this partnership isn’t just about economics. It serves a strategic purpose, especially as the Maldives navigates its relationship with China. The Maldives had previously signed a free trade agreement with China in 2017, but it was put on hold under the previous administration. With Muizzu now in power, the agreement is set to take effect in January 2025, raising concerns about the Maldives’ long-term fiscal health and economic dependence on China.

Nisha Taneja, a professor at the Indian Council for Research on International Economic Relations, spoke on the importance of the FTA. She pointed out that without it, the Maldives may lose its competitive edge compared to China. The FTA could help diversify the Maldives’ trade networks and reduce reliance on a single partner.

Recent statistics show that more than 86% of Maldivians are currently concerned about rising costs of imports. Establishing closer trade ties with India could ease this pressure and provide more stability to local businesses.

In the broader context, initiatives like the South Asia Subregional Economic Cooperation (SASEC) program, which began in 2001, aim to enhance trade and connectivity among countries like the Maldives, India, and others in the region. By enhancing cooperation in transport, energy, and trade, SASEC fosters regional prosperity and stability.

In conclusion, the proposed FTA and investment treaty between India and the Maldives offer more than just trade benefits. They serve as tools for strengthening bilateral ties, fostering economic resilience, and anchoring India’s influence in the Indian Ocean. With careful implementation focusing on fair trade terms, both countries stand to gain significantly.

For more context on international trade agreements, you can read about the Asian Development Bank’s initiatives.

Source link

INDIA AND MALDIVES, MOHAMED MUIZZU, FREE TRADE AGREEMENT, INDIAN OCEAN, PM NARENDRA MODI, PM MODI’S MALDIVES VISIT MAY HERALD NEW ECONOMIC ERA WITH FTA TALKS ON TABLE