India is wooing its friendly neighbour, Maldives, with a bouquet of new projects and assistance. On Thursday, External Affairs Minister S. Jaishankar and Foreign Minister of Maldives Abdulla Shahid held a meeting through video conference, where they announced the ambitious Greater Male Connectivity Project (GMCP).
The GMCP is touted to be the largest infrastructure project ever to be implemented in the Maldives, far outshining the 1.39 km Maldives China Friendship Bridge, the most visible infrastructure project in the country as of now.
The GMCP was an election promise that President Ibrahim Solih had made to the country. Later, according to sources, he personally sought India's assistance while interacting with the EAM in 2019, for executing the project. The project has been on the fast track, with approvals having come in within a year. It envisages 6.732 km of bridge and causeway links between the islands of Villingili, Gulhifahu and Thilafushi with Male.
India's support to the project will be through a financial package, consisting of a grant of USD 100 million and a Line of Credit (LoC) of USD 400 million. Gulhifahu is important as a port is being built there under an Indian LoC.
The two countries also announced the start of a direct cargo ferry service between India and the Maldives, a project that Prime Minister Narendra Modi had spoken about last June. The ferry service will enhance sea connectivity and provide a route for steady supplies. They also announced the creation of an air travel bubble between the two countries, making the Maldives the first country in the neighbourhood with which India will have an air travel bubble. The island nation opened its borders for tourists on July 15. The first flight in the bubble will take off on August 18.
India is also extending an urgent financial assistance to the neighbour by way of a soft loan. The amount of the loan is not announced, but sources reveal that with tourism and fish exports coming to a halt in March because of the pandemic, the Maldivian economy went into severe stress and Solih personally requested financial assistance during a telecon with Modi.
This is the first financial assistance announced by the Indian government to any country to deal with COVID-19. The Maldives has a financial gap of USD 395 million for the rest of the year. Earlier, to bolster dwindling Maldivian foreign reserves, India provided USD 150 million to the Maldives under the bilateral currency swap agreement of USD 400 million. Maldives can swap the remaining USD 250 anytime, till July 2021.
India also said it would be increasing quota allocations for supply of essential commodities to the Maldives, in line with a bilateral trade agreement of 1981. Being a country that is almost entirely dependent on imports, these quotas provide certainty and price stability in items like potatoes, sugar, onion, rice, wheat, pulses, as wells as river sand and stone aggregates.
In addition seven big projects are being implemented under the USD 800 million LoC — water supply and sewerage systems on 34 islands, additional development project— road development and reclamation, expansion of Maldives industrial fisheries companies (MIFCO), Gulhifalhu Port Project, Hanimadhoo International airport redevelopment and construction of an international cricket stadium at Hulhumale.
There has been a reset in India's relations with the Maldives since Solih assumed office in November 2018. India's total financial commitment for the country— loan and grant projects —is over two billion USD, all of which have been announced since Solih took over.
