Home / India News / India unveils economic aid package for Maldives, including $500 mn connectivity project and cargo service
India on Thursday unveiled a $500-million package to help the Maldives government implement a connectivity project linking its capital Male with three islands and announced the launch of a cargo ferry service between the two countries.
An air travel bubble between the two sides will become operational from August 18 and India will renew quotas for supplying essential commodities to the Maldives during 2020-21. These announcements were made during a virtual meeting between external affairs minister S Jaishankar and his Maldives counterpart Abdulla Shahid, which was part of regular high-level exchanges between the two sides.
Responding to a request from the government of the Maldives, Jaishankar announced India’s decision to support the Greater Malé Connectivity Project (GMCP) through a financial package comprising a grant of $100 million and a new line of credit for $400 million.
Jaishankar noted this will be the largest civilian infrastructure project in Maldives, connecting Malé with the islands of Villingili, Gulhifahu, where a port is being built under an Indian line of credit, and Thilafushi, where a new industrial zone is coming up.
Male will be linked to the islands by a bridge-and-causeway link spanning 6.7 km. “Once completed, this landmark project will streamline connectivity between the four islands, thereby boosting economic activity, generating employment and promoting holistic urban development in the Malé region,” the external affairs ministry said in a statement.
Jaishankar recalled Prime Minister Narendra Modi’s announcement in the Majlis or Maldivian Parliament in June last year to start a ferry service between the two sides and announced that a direct cargo ferry service will begin shortly to enhance bilateral trade and connectivity and boost the economic partnership. The cargo service will “provide predictability in supplies for importers in Maldives and exporters in India” and reduce logistics costs and times, he said.
An air travel bubble between India and the Maldives to facilitate the movement of people from both sides for employment, tourism and medical emergencies will also be created, Jaishankar said. “In keeping with our special ties, Maldives is the first neighbouring country with which an air bubble is being operationalised. The air bubble symbolises India’s support to shore up tourism arrivals and revenues in the Maldives,” the statement said.
Health protocols in both countries will be strictly followed and the first flight under the air bubble is expected to commence on August 18, the statement added.
While fulfilling India’s commitment under the bilateral Trade Agreement of 1981, Jaishankar said New Delhi will renew quotas for supplying essential commodities, such as potatoes, onions, rice, wheat, flour, sugar, dal, eggs and river sand and stone aggregates, to the Maldives for 2020-21.
The quotas will assure food security and the supply of essential construction items, and provide certainty and price stability for these goods in the Maldives.
In line with India’s commitment to aid the economic recovery of the Indian Ocean archipelago, Jaishankar said an in-principle decision has been made to extend urgent financial assistance to the Maldives through a soft loan arrangement. The modalities for this are being finalised by the two sides.
Thursday’s announcements to boost aid for the Maldives came against the backdrop of concerted efforts by India to boost economic assistance and connectivity with key neighbours amid the border standoff with China.
Last month, India handed over 10 railway locomotives to Bangladesh, reflecting a renewed focus on its “neighbourhood first” policy. This came close on the heels of the first cross-border container train reaching Bangladesh with 50 containers of FMCG goods and fabrics and the first shipment of container cargo from Kolkata to Agartala in the landlocked northeastern region via Bangladesh’s Chattogram port.
India also announced a $400-million currency swap facility for Sri Lanka under the Saarc framework last month, and Colombo’s request for a bilateral swap facility for $1.1 billion is being considered by New Delhi. India earlier provided $400 million through an extended currency swap arrangement to the Maldives to tide over a liquidity shortage.
Jaishankar and Shahid took stock of bilateral relations and “noted with satisfaction that the Covid-19 pandemic has not been able to slow down the pace of bilateral cooperation”, the statement said. Jaishankar assured the government of President Ibrahim Solih that India “stood by its close maritime neighbour and friend in difficult times”.
Maldives has been the largest beneficiary of India’s Covid-19-related assistance among neighbouring countries, and Jaishankar reaffirmed New Delhi’s continued commitment for support to the Maldives for minimising the health and economic impact of the pandemic.
When supply chains were disrupted by the pandemic, India supplied essential food and construction materials to the Maldives. In May, India gifted 580 tonnes of essential food items through “Mission SAGAR”.
Shahid expressed appreciation for the steps taken by India to meet the development priorities of his government. He described the Greater Malé Connectivity Project as a new milestone in bilateral ties that will “anchor the economic and industrial transformation of the Maldives”.
He also conveyed gratitude for the financial assistance of $250 million being extended by India and said this will help in reviving the Maldivian economy amid the impact of the Covid-19 crisis.
The two ministers expressed satisfaction at progress achieved in implementing bilateral projects and initiatives, especially those under an earlier line of credit for $800 million.