India says Maldives' fiscal stability at risk from recent trade pacts

1/2/2025 7:09

India is concerned recent trade pacts signed by the Maldives will likely hurt the archipelago's cash-strapped economy, the Indian foreign ministry said on Friday, in a reference to agreements between the Maldives and China, as well as Turkey.



China and India both vie for influence in the strategically located Indian Ocean nation, whose $7.8 billion economy has struggled with low foreign exchange reserves and substantial external debt, sparking fears of a default.



Analysts have previously said that a free trade agreement between China and the Maldives, which came into effect on Jan. 1, risks increase Male's balance of payments deficit with China, one of its main sources for consumer goods, lead to customs duty losses, and make it vulnerable to supply chain disruptions.



The Maldives also signed a trade pact with Turkey last year, which local media reports said involved reduced tariffs on both sides.