US$ 500 million grant shared by India for the Greater Male Connectivity project in favour of infrastructure development

Attended by Foreign Secretary Harsh Vardhan Shringla, New Delhi and Male signed 4 MoUs, including a US$ 100 million Indian grant for an ambitious connectivity project, during Foreign Secretary Harsh Vardhan Shringla’s visit to the Maldives.

November 9, 2020

4 MoUs were signed between India and Maldives including 2 on HICDP, 1 on GMCP and 1 on sports and youth affairs.

India has provided a US$ 100 million grant, which is part of US$ 500 million for the Greater Male Connectivity Project.

Bilateral trade value between India & Maldives stands at a value of US$ 290.27 million and India forms its 4th largest trading partner.

India’s ‘Neighbourhood First Policy’ and Maldives’ ‘India First Policy’ aim towards a stable, peaceful and prospering relationship.

India and Maldives signed 4 MoUs (Memorandum of Understandings) which included 2 MoUs on “high impact” community development, an MoU on cooperation in sports and youth affairs and the 4th one of US$ 100 million grant, which is part of India’s US$ 500 million package for the Greater Male Connectivity Project (GMCP). Last month, the two governments inked a deal for a US$ 400 million-line of credit from the Exim Bank of India. These MoUs signify strong development partnership between these two nations which are multi-faceted and specifically designed to cater to the needs of the government and people of Maldives.

Maldives’ Strategic Importance

An island nation, being one of Asia’s smallest country, Maldives is the world’s most geographically dispersed countries. Despite being the smallest Asian country, Maldives is one of the world’s most geographically dispersed countries bestraddling a 960-km-long submarine ridge like a tollgate in the middle of the Indian Ocean. Since, the Indian Ocean itself is a vital highway for global energy and trade flows, the importance of Maldives for international sea lanes of communication is vital. The Republic of Maldives is arguably the most strategically important of India’s neighbours.   This augurs well for the country under India’s Neighbourhood First Policy, in accordance with which, India remains a committed development partner for a stable, prosperous, and peaceful Maldives. On similar grounds, Maldives signed an “India First” Policy in 2018, completely in sync with India’s neighbourhood first policy. The bilateral relationship between these two nations rest of the foundation of mutual trust, understanding, and sensitivity to each other’s concerns.

Infrastructure Cooperation

In March 2019 India and Maldives signed a bilateral pact on High Impact Community Development Projects (HICDPs), under which a total grant of US$ 5.6 million was announced for high impact grant projects in Maldives. The High Impact Community Development Projects benefit the communities in a very direct manner and promote socio-economic welfare of the people, contributing to areas of livelihood and income generation, health, education, gender and child development, sports and sustainable development. Later in august 2020, India announced a support for a mega infrastructure project for its neighbour, the Greater Male Connectivity Project (GMCP), in which Maldives will get a financial package consisting of a grant of USD 100 million and a new Line of Credit of US$ 400 million from New Delhi. Besides this mega project Delhi also announced the launch of cargo ferry services and air travel bubble between the two nations.  In line with the hallmarks of Indian development cooperation, the GMCP will be an economic lifeline connecting Male with Vilingili, the new commercial port at Gulhifalhu and industrial zone at Thilafushi. GMCP will include infrastructure projects such as port, roads, and reclamation, expansion of airports, building of new Cricket Stadium and cancer hospital and development of fisheries and will provide a major fillip to the Maldivian economy.

India is Maldives 4th largest trading partner with a bilateral trade value of US$ 290.27 million with trade balance for India

Defence Cooperation

Defence and security have also been a major area of cooperation between the two nations. India provides the largest number of training opportunities for Maldivian National Defence Force (MNDF), meeting around 70% of their defence training equipment. India has trained over 1250 MNDF trainees in the past decade and has offered 175 training vacancies in 2019-20. Their defence cooperation also extends to the areas of Joint Exercises, Maritime Domain Awareness, gifting of hardware, infrastructure development etc.

Disaster Management Cooperation

Maldives saw great devastation in the 2004 Indian Ocean Tsunami, and it was India that provided large scale assistance to Maldives in the aftermath. During the COVID-19 pandemic, global supply chains had come to screeching halt and affected economies all over the world. Under the aegis of Mission Sagar, India continued to provide crucial commodities to the Maldives and other nations like Mauritius and Seychelles, Comoros, and Madagascar. During these times, India provided a rapid response medical team, medicines to meet 3 months requirement, a currency swap of US$ 150 million to help Maldives tide over covid-19 inflicted economic crisis and financial assistance of US$ 250 million to Maldives in September 2020, through investment by the State Bank of India in Maldives Government bonds of the same value on concessional terms.

Bilateral Relations

India is Maldives 4th largest trading partner after UAE, China, and Singapore. Their bilateral trade stands at US$ 290.27 million with trade balance for India. Seeking to boost trade and investment an 18 member CII CEO delegation visited Male on August 6-7 to meet their Maldivian counterparts to explore further business opportunities. The shipping corporation of India started a cargo Ferry Service started on 21 September 2020.
India’s relationship with Maldives, except for a brief pause, has been distinguished in all aspects: linguistic, cultural, religious, and commercial. As India aims at promoting an area of peace and stability around the Indian Ocean Region, Maldives has become an essential partner in India’s role as the net security provider in the area. The commendable bilateral cooperation between India and Maldives could serve as a useful template for developing our ties with other neighbours as part of India’s Neighbourhood First Policy.