IAS Gyan

Daily News Analysis

India announces $500 million infra project, $250 million financial aid for Maldives  

14th August, 2020 International Relations

Context: India committed to Maldives a five-pronged package including infrastructure worth $500 million, a direct cargo ferry service, creation of an air travel bubble, and uninterrupted supply of essential commodities and additional financial aid of $250 million to help the cash-strapped economy.


  • India decided to support the implementation of Greater Malé Connectivity Project (GMCP) through a financial package consisting of a grant of $100 million and a new line of credit of $400 million.
  • This will be the largest civilian infrastructure project in Maldives, connecting Malé (the capital) with three neighbouring islands — Villingili, Gulhifalhu – by construction of a bridge-and-causeway link spanning 6.7 km.
  • 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.
  • Jaishankar also conveyed the decision to renew quotas for supply of essential commodities to Maldives for 2020-21. The commodities include food items as well as river sand and stone aggregates.


India-Maldives relations:


  • 1976 Maritime treaty:
    • India and the Maldives signed a maritime boundary treaty to agree on maritime boundaries.
    • Treaty explicitly places Minicoy on the Indian side of the boundary.


  • Commercial relations:
    • Since the success of Operation Cactus, the relations between India and Maldives have expanded significantly.
    • India has provided extensive economic aid and has participated in bilateral programmes for the development of infrastructure, health, telecommunications and labour resources.
    • It established the Indira Gandhi Memorial Hospital in Malé, the capital of Maldives, expanded telecommunications and air links and increased scholarships for Maldivian students.


  • Military relations
    • Indian Navy gifted a Trinkat Class Fast Attack Craft of 46 m length to Maldives National Defence Force's Coast Guard.
    • India started the process to bring the island country into India's security grid.
    • India has also signed an agreement which includes following:
    • India will permanently base two helicopters in the country to enhance its surveillance capabilities and ability to respond swiftly to threats.
    • Military teams from Maldives will visit the tri-services Andaman Nicobar Command (ANC) to observe how India manages security and surveillance of the critical island chain.
    • Ekuverin, an annual joint military exercise, has been held every year since 2009 between India and Maldives.
    • The exercise aims to enhance the interoperability between the Indian Army and Maldives National Defence Force in order to effectively undertake counter-terrorism operations in urban or semi-urban environments.