UPSC Exam: RSTV - India ' s World: Maldives-China FTA: Implications



  • Maldives became the second country in South Asia, after Pakistan, to enter into a free trade agreement (FTA) with China.
  • Under the FTA agreement, China will exempt its Maldivian imports, mostly fisheries products, from taxes.
  • The main exports from Maldives are from its fishing industry – mainly destined for Europe. However, that market has become more difficult as EU revoked its duty-free status after the Maldives graduated from a lower-income country to an upper-middle-income nation.
  • The Maldives, on its part, would waive tariffs on its Chinese imports.

Why was it not in line with established principles of democracy?

  • An emergency session of the Maldivian Parliament was called to pass the nation’s first Free Trade Agreement with China sans the opposition.
  • The parliamentary committee vetted the FTA deal in less than 10 mins following three minutes of submission on the floor
  • In a highly unusual move, the approval was granted despite not the following procedure with deliberations closed off to the public and media.
  • No access was given to the opposition despite repeated requests for reviving.
  • The government of President Yameen Abdul Gayoom (better known as YAG), allowed less than one hour for the entire Parliamentary process to approve the 1,000+ page document.

What does the Maldivian opposition party say about the FTA?

  • While China has said the FTA serves the interests of the two countries and the region, head of the Maldives Opposition party and former President of Maldives Mohammad Nasheed openly criticised the pact saying it undermined Maldives’ sovereignty and is bad for the region and leaves the country in debt for China.
  • They were concerned over the sudden and rushed Free Trade Agreement (FTA) with China, without any disclosure of details to the public or to the MPs.
  • The opposition further asserted that there were concerns the FTA would further increase the trade deficit, which was tilted in China’s favour.

 Why is India worried?

  • Maldivian government has extended invitations to establish free trade agreements with countries including Japan, the United States of America, the United Kingdom and countries of the European Union. However, it doesn’t name India.
  • The political developments in Maldives over the last 5 years have caused tremendous concern in India. Maldives, once a thriving and stable country today has witnessed large scale political turmoil and rise of radicalism. Much of it has coincided with the increasing strategic outreach of China and has been followed by a decline in Indian influence in the atoll state, which lies in a geo-politically significant region which India considers to be its own strategic backyard.
  • The increasing presence of China in the Indian Ocean could be a potential security threat to India. China with its deep pockets may change the status quo and attract smaller countries to its lap.

Way Forward?

  • India should give special preference, commitments and incentives like it is being provided to Afghanistan.
  • There should be a high-level visit as PM Modi has cancelled his visit in 2015 due to political turmoil
  • India should be pro-active in its approach in the near future and not reactive. It should reaffirm its traditional, intimate ties with Maldives and take forward India’s ‘Neighbourhood First Policy’ and its maritime security doctrine with the mantra of ‘SAGAR’ (Security and Growth for All in the Region) to assure Maldives that India will be its Net Security Provider.
  • India’s strategy needs to be changed by shedding its big brother attitude and work in close coordination with other like-minded countries like US, UK, Japan etc.
  • India provides donations and China provides loans. India respects its partners and is seeking an equitable partnership and not the kind of predatory economic and physical arrangements like China. This should be clearly expressed in India’s talks.

Also Read | India-Maldives Relations

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