India and the Maldives on Monday launched a cargo ferry service connecting Tuticorin and Cochin ports with Male with the aim of cutting costs and time taken to transport goods between the two countries.

The launch of the ferry service came a day after India provided a 10-year soft loan of $250 million to the government of the Maldives as budgetary support to mitigate the economic impact of the Covid-19 pandemic. India will subsidise the ferry service in its initial stage with $3 million, officials said.

The maiden voyage of the ferry service was launched during a virtual ceremony by India’s minister of state for shipping Mansukh Mandaviya and the Maldives’ minister of transport and civil aviation Aishath Nahula. The ceremony was joined by representatives of Tuticorin and Cochin ports and officials of the Maldives Ports Limited and the foreign ministry of the Maldives.

The cargo vessel MCP Linz, operated by the Shipping Corporation of India (SCI), will travel from Tuticorin to Cochin and then to Kulhudhuhfushi port in the north of the Indian Ocean archipelago on September 26 before making its way to Male on September 28.

The vessel can carry 380 TEUs and 3,000 metric tonnes on bulk cargo. The turnaround time for voyages will be 10 to 12 days and the service will operate twice a month. “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,” the Indian mission in Male said in a statement.

Officials said the ferry service is aimed at upgrading the trade partnership and improving logistics on both sides. Though the two sides have traded for centuries, India is currently only the fourth largest trading partner of the Maldives, after the UAE, China and Singapore.

“Alongside the expansion of Hanimaadhoo airport through an Indian line of credit, connectivity to the northern port of Kulhudhuhfushi through the cargo ferry service will underpin the economic development of northern Maldives and facilitate investments in tourism and other sectors,” said an official who declined to be named.

Besides expanding the markets of medium and small-sized enterprises in India, the ferry service will give an opportunity to Maldivian exporters of tuna and other marine products to enter the Indian market and explore the possibility of sending their goods to Europe via Cochin and Tuticorin ports, officials said.

The two sides had signed a memorandum of understanding on the ferry service during Prime Minister Narendra Modi’s visit to the Maldives in June 2019. In his address to the Majlis or Parliament during that visit, Modi had announced India’s commitment to start the ferry service.

A team from SCI visited the Maldives in July last year for preliminary studies and the Federation of Indian Chambers of Commerce and Industry (FICCI) carried out a feasibility study on the cargo ferry service during March-April, which found India’s share of the 27 principal items imported by the Maldives was well below the potential.

The decision to launch the cargo ferry service between the two sides was announced during a virtual meeting between external affairs minister S Jaishankar and foreign minister Abdulla Shahid on August 13

The cargo ferry service also reflects the synergies between the “neighbourhood first” policy of the Indian government and the “India first” policy of the Maldives under the leadership of President Ibrahim Solih, the officials said.

Addressing the launch ceremony, Mandaviya said the ferry service will boost bilateral trade, provide a cost-effective alternate means for transporting goods, and help in ensuring food security in the Maldives. Nahula said the ferry service will decentralise economy activity and open a new corridor for commerce, development and tourism.