UPSC Prelims Practice Questions — First Round of India–Maldives Free Trade Agreement Negotiations Concludes Successfully

Q1. The first round of India–Maldives Free Trade Agreement negotiations, concluded in July 2026, was led on the Indian side by which one of the following?

  • A. The Department of Economic Affairs, Ministry of Finance
  • B. The Indian Ocean Region Division, Ministry of External Affairs
  • C. The Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry
  • D. The Department of Commerce, Ministry of Commerce & Industry

Q2. As cited in the announcement on the first round of India–Maldives FTA negotiations, which one of the following correctly describes India's position in the Maldives' external trade?

  • A. India is the Maldives' largest trading partner
  • B. India is the Maldives' second-largest trading partner
  • C. India is the Maldives' third-largest trading partner, after China and the UAE
  • D. India is the Maldives' largest source of foreign direct investment but only its fifth-largest trading partner

Q3. Consider the following statements comparing the proposed India–Maldives Free Trade Agreement with the pre-existing framework governing their trade: 1. Before the launch of these negotiations, India–Maldives trade was governed multilaterally under the South Asian Free Trade Area (SAFTA), with no dedicated bilateral trade instrument between the two countries. 2. The Bilateral Investment Treaty is being pursued as an instrument separate from the FTA, which both sides agreed to expedite. 3. The 2024 India–Maldives Vision document envisaged a bilateral FTA confined to trade in goods, expressly excluding trade in services. Which of the statements given above is/are correct?

  1. Before the launch of these negotiations, India–Maldives trade was governed multilaterally under the South Asian Free Trade Area (SAFTA), with no dedicated bilateral trade instrument between the two countries.
  2. The Bilateral Investment Treaty is being pursued as an instrument separate from the FTA, which both sides agreed to expedite.
  3. The 2024 India–Maldives Vision document envisaged a bilateral FTA confined to trade in goods, expressly excluding trade in services.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q4. With reference to the institutional and financial architecture of India–Maldives economic engagement, consider the following: 1. A bilateral currency swap arrangement of USD 400 million and INR 30 billion extended by India to the Maldives. 2. Launch of RuPay card services in the Maldives. 3. A commitment to operationalise the settlement of bilateral trade transactions in local currencies. 4. An India–Maldives Comprehensive Economic Partnership Agreement (CEPA) signed in 2024, which the current negotiating round seeks to review and upgrade. Which of the above is/are NOT correct?

  1. A bilateral currency swap arrangement of USD 400 million and INR 30 billion extended by India to the Maldives.
  2. Launch of RuPay card services in the Maldives.
  3. A commitment to operationalise the settlement of bilateral trade transactions in local currencies.
  4. An India–Maldives Comprehensive Economic Partnership Agreement (CEPA) signed in 2024, which the current negotiating round seeks to review and upgrade.
  • A. 1 and 2 only
  • B. 3 only
  • C. 4 only
  • D. 2, 3 and 4

Q5. How many technical sessions were held during the first round of India–Maldives Free Trade Agreement negotiations?

  • A. Four
  • B. Six
  • C. Eight
  • D. Twelve

Q6. The decision to initiate discussions on a bilateral India–Maldives Free Trade Agreement covering trade in goods and services was first announced under which one of the following?

  • A. The 'India and Maldives: A Vision for Comprehensive Economic and Maritime Security Partnership', adopted in October 2024
  • B. The SAFTA Ministerial Council, at its meeting on tariff liberalisation for Least Developed Countries
  • C. The first meeting of the India–Maldives High Level Core Group
  • D. The Colombo Security Conclave's economic-security working group

Q7. In the context of the India–Maldives negotiations, the 'Bilateral Investment Treaty' that both sides agreed to expedite is best described as an instrument that:

  • A. eliminates or reduces customs tariffs on goods traded between the two countries, subject to rules of origin
  • B. lays down reciprocal standards of protection and treatment for investors and investments of one country in the territory of the other, together with a dispute-settlement mechanism
  • C. enables the two central banks to exchange specified amounts of each other's currencies to meet short-term external liquidity needs
  • D. grants preferential market access to service suppliers of each country across specified modes of supply