New Delhi: The free trade agreement (FTA) with China has “no benefit” for the Malé, as the island archipelago has little exports to Beijing, former president of the Maldives, Mohamed Nasheed, told ThePrint in an exclusive chat Wednesday. Nasheed also hopes that India would be able to step in, and have “proper conversations” with Maldives, which is dealing with a massive debt crisis, to help it understand the steps necessary to prevent a default.
“We don’t benefit from a free trade agreement with China because we do not have a trade surplus with China. We do not export to China, we import from them. So, we are losing tariffs, we are losing import duties. The government revenue stream has come down. This is very unfortunate. Again, I am hopeful that the government will turn around on that,” he said.
The former Maldivian President is in New Delhi for the Raisina Dialogue organised by the Ministry of External Affairs and the Observer Research Foundation, and addressed a session on tourism earlier Wednesday.
India has voiced its concern over the Malé – Beijing FTA, which came into force earlier this year, and has said that it will look at such deals while framing its own foreign aid policies. Ministry of External Affairs spokesperson Randhir Jaiswal had flagged the loss of revenue from the reduction in import duties on Chinese imports, as a potential challenge for the fiscal health of the Maldives.
The FTA, which was signed in 2014, came into force on 1 January, 2025. The Maldivian Parliament in 2017 had approved the deal, but it was suspended in 2018 when the Ibrahim Solih-led government suspended it. The deal had been signed under the administration of President Abdulla Yameen, who during his tenure (2013-2018) had pivoted Malé towards China.
However, incumbent President Mohamed Muizzu, who assumed office in 2023, allowed the FTA to come into force this year. Malé, due to its burgeoning debt repayment requirements, is facing a liquidity crisis. Last year, the American ratings agency Fitch downgraded the Maldivian debt to “junk” status due to its worsening liquidity situation.
Last October, Muizzu visited India, which saw the two governments agree to reboot ties, while India promised up to $750 million in currency swap agreements to the island archipelago. Muizzu’s visit had come at the end of a challenging year for India-Maldives ties.
At the start of his term, Muizzu had taken aim at New Delhi’s influence in Maldives, and visited both Türkiye and China, before travelling to India. The most challenging moment came, when three deputy ministers of the Maldivian government had reportedly insulted Indian Prime Minister Narendra Modi in January 2024.
“Well, to start with, Maldives’ prosperity, security and safety is dependent on good relations with India. Whoever is ruling the Maldives would have to understand that. Even if they do not understand before they come into government, they would very quickly learn and they will understand that a good relationship with India is paramount for our prosperity,” said Nasheed.
He added, “The new government started on a very wrong footing. It’s partly because of what he had inherited, the legacy that he had from the previous government, when they were in government before, when President [Abdulla] Yameen was in government.”
By the end of the year, India had agreed to roll over at least $100 million worth of loans owed by Malé, while going a step further and promising further financial support. Muizzu, who had been perceived as a leader with backing from the “India Out” lobby in Maldives, by the end of 2024, had become a partner to New Delhi in the region.
“But that never was the general sentiment of the people of the Maldives, so it wasn’t that difficult for him to turn around and become more receptive to India, because there would not be a backlash by doing that,” said Nasheed.
(Edited by Mannat Chugh)
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