India has won a $500 million connectivity project in the Maldives. The contract not only boosts India-Maldives relations but also lands a heavy blow to China as Beijing was looking to make inroads into the Island nation in a bid to break India’s sphere of influence in the region.
As reported by Eurasian Times earlier, India has a strong influence in the Indian Ocean Region and Beijing has been working to undo it with its financial muscle.
Although China has won key contracts in Myanmar, Sri Lanka, and the Maldives before, the latest connectivity project awarded to India is a big blow to Chinese ambitions. According to sources, both India and China were aggressively vying for the connectivity project in the Maldives.
India also announced a financial package to fund the Maldives’ Greater Malé Connectivity Project. With a $100 million grant and a new line of credit of $400 million, India will help connect the capital Male with three neighbouring islands — Villingili, Gulhifahu (where a port is being built under an Indian LoC), and Thilafushi (a new industrial zone) by constructing a 6.7 km bridge-and-causeway link.
“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 Male region,” the external affairs ministry said in a statement.
Gulhifalhu port project is being developed at cost of around $300 million and Maldivian government had announced in February this year that the funds will be arranged via India’s Exim Bank in the form of a loan. The project intends to facilitate the relocation of the Male Commercial Port and create accommodation for 40,000 expatriates.
To increase the connectivity between the two countries, India’s External Affairs Minister S. Jaishankar has also announced a direct cargo ferry service and the creation of an Air Travel Bubble. The Maldives is the first neighbour with which an air bubble is being operationalised by India, likely to commence from 18 August.
The move is expected to benefit both countries in terms of economic activity, tourism, employment generation. New Delhi has also provided $250 million as budgetary support to help the Indian Ocean archipelago cope with the Covid-19 crisis.
China’s Increasing Maldives Footprint
India’s huge investment in the island nation is being seen as a counter to Beijing’s China-Maldives Friendship Bridge under its Belt and Road Initiative. On 11 August, China also signed an agreement worth $11.8million to develop micro-grid seawater desalination in five islands in the Maldives.
In June this year, China-backed AIIB approved a loan of $7.3 million to the Maldives, the bank’s 1st financing project in the country, to strengthen its health response to COVID19. China had also launched an ambitious social housing project in the Maldives’ Hulhumale Island. The two countries were cooperating over all kinds of exchange programmes to strengthen people-to-people relationships.
As per India’s Gateway House research, China’s investment in multiple housing projects, a power plant, a bridge, water and sewage treatment plants of the Maldives worth around $1.5 billion. China has been investing in infrastructure projects in countries in the Indian Ocean Region to encircle India as part of its strategy, according to experts, but Beijing has rubbished such allegations.