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India launches first ever cargo ferry with Maldives: Milestone in Indian Ocean connectivity initiatives

The first ever Cargo Ferry Service between India and the Maldives was jointly launched on Sept. 20 opening a new chapter in connectivity initiatives in the Indian Ocean Region.

Mansukh L. Mandaviya, Minister of State for Shipping (Independent Charge) and Aishath Nahula, Minister of Transport and Civil Aviation of the Maldives in a virtual ceremony.

The ceremony was also attended by representatives from Tuticorin and Cochin ports, as well as officials from the Maldives Ports Limited (MPL) and the Foreign Ministry of Maldives.

The Cargo Ferry Vessel MCP Linz operated by the Shipping Corporation of India (SCI) will connect Tuticorin and Cochin ports in India with Kulhudhuhfushi and Male ports in the Maldives.

The vessel is expected to arrive in Kulhudhuhfushi on September 26 and Male on September 28. The MCP Linz is a combination vessel which can carry 380 TEUs and 3000 MT on bulk cargo, and will have a turnaround time of 10-12 days for its voyages, officials said.

This vessel provides direct cargo connectivity between India and the Maldives on a predictable and affordable basis for the first time, and will lower costs and times for traders in both countries.

In his address to the People’s Majlis during his State Visit to the Maldives in June 2019, PM Narendra Modi announcedIndia’s commitment to start a ferry service connecting India and the Maldives.

An MoU was signed between the Ministry of Shipping in India and the Ministry of Transport and Civil Aviation, Maldives, on the sidelines of the State Visit. A team from SCI had visited Maldives in July 2019 to undertake preliminary studies.

Thereafter, FICCI undertook a feasibility study on a cargo ferry service between India and the Maldives, earlier this year. The decision to commence the Cargo Ferry Service between the two nations was announced during a virtual meeting between Foreign Minister Dr. S. Jaishankar and Foreign Minister Abdulla Shahid on August 13. To begin with, India will subsidise the service at approximately $ three million.

Nourished by close historical and cultural ties, Indians and Maldivians have traded for centuries. Yet, India is only the fourth largest trading partner of the Maldives today. The Cargo Ferry Service is visioned as a key instrument to upgrade the trade partnership and unfetter logistics on both sides.

Alongside the expansion of the Hanimaadhoo Airport (through an Indian Line of Credit), the Cargo Ferry Service connectivity to the northern port of Kulhudhuhfushi will underpin the economic development of northern Maldives and facilitate investments in tourism and other engines of prosperity. Beside the expansion of markets for MSMEs in India, the Cargo Ferry service will provide an opportunity to Maldivian exporters of tuna and other marine products to scope the vast Indian market and springboardto Europe through Cochin and Tuticorin ports. For instance, Cochin Port has weekly connectivity to Europe through a 6500 TEU vessel.

The Cargo Ferry Service is another commitment delivered by India to connect Indian and Maldivian markets, unlock the trade and investment potential between the two nations, and, strengthen people-to-people contacts for mutual prosperity, officials pointed out.

The ferry service will run twice a month. It will be operated by Shipping Corporation of India on a vessel with a capacity of 380 TEUs, sources added. Maldives imports more from UAE, China and Singapore implying that bilateral trade with India is not commensurate with it’s potential.

India’s bilateral trade with Maldives has hovered around US$ 280 million annually for some years now and stood at US$ 286.85 million in 2019.

Direct ferry will reduce transportation cost, provide a timely, short and cost effective means of transportation for goods from India to Maldives and thereby incentivize more trade between the two countries.

The ferry has a cold storage facility, which will also allow more exports from Maldives of tuna fish and other marine food items which are a specialty of Maldives, sources informed.

Since Maldives is a 100% import dependent country, improved connectivity between India and Maldives will help boost bilateral trade and help economic acitivity in Maldives, already reeling under the disruption brought about by Covid-19.

The Covid-19 crisis has drawn the attention of the world towards resilient supply chains. In May-June this year, while Maldivian imports have fallen 50%, India has become the 2nd largest exporter to Maldives. India has, therefore, proven that it can provide supply side security to the Maldives during such uncertain times.

A number of bilateral projects are in the pipeline, owing to which export of construction material and other commodities from India to Maldives is bound to rise in the coming months. This includes the Greater Male Connectivity Project (under $ 400 million LOC and $ 100 million grant), projects under the US$ 800 million Line of Credit, sources informed.

There is great enthusiasm on both the sides for the launch of this service. FICCI organized three virtual roadshows in Tuticorin, Kochi and Mumbai to publicize this service. The response from exporters has been positive.

During its maiden journey the ferry will make a stop at Kulhudhuffushi port in North Maldives, before it reaches Male on 29 September 2020. Maldives is making concerted efforts to revitalize the economy of Northern Maldives, sources informed. It is understood that in order to give financial incentives, the Maldives Majlis has approved a 50% reduction in custom duties for import items cleared at Kulhudhuffushi port. India has also been assisting GoM in developing its Northern region, through a number of bilateral projects/ initiatives.

This service will improve regional connectivity. India has been working to promote a number of initiatives and projects in order to increase regional connectivity in the Indian Ocean Region.

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