The Maldives on Tuesday terminated an airport management contract with Indian firm GMR that had been dogged by corruption allegations, prompting New Delhi to warn the move could scare off investors.
President Mohamed Waheed's government gave five days to GMR Group to leave after prematurely ending the 25-year lease of the Ibrahim Nasir International Airport for a one-time fee of $78-million and revenue share thereafter.
"The government has advised the MACL (Maldives Airports Company Ltd) to issue a termination notice (to GMR) and it has been done," President Waheed's spokesman Masood Imad told AFP.
There was no immediate comment from GMR which has run the airport since November 2010 together with Malaysia Airports Holdings Berhad which had a 23-percent stake in the operation. GMR held 77 percent.
The airport is the main arrival point for the thousands of foreign tourists who flock to the sun-splashed Indian Ocean archipelago.
Waheed's government had objected to the privatisation carried out by his predecessor Mohamed Nasheed, the country's first democratically elected leader who quit earlier this year and claimed he was forced out.
Key government ministers had alleged widespread corruption in the airport privatisation, a charge denied by the previous administration as well as the GMR Group.
The Indian government warned that the Maldivian government's unilateral termination would "send a very negative signal to foreign investors and the international community".
The Indian foreign ministry said they would closely monitor the developments and asked the Maldivian government to ensure the safety of Indian nationals.
"The government of India... is prepared to take all necessary measures to ensure the safety and security of its interests and its nationals in the Maldives," the ministry said in a statement.
India noted that the deal had been monitored by the International Finance Corporation "to ensure the highest degree of competitiveness, transparency and credibility of the process".
Nasheed came to power in the nation of 330 000 Sunni Muslims in 2008 and stepped down in February this year. He later claimed he was forced out in a coup backed by Waheed who was then his deputy.
The airport was opened on April 1966 and later upgraded to the status of an international airport in November 1981. It is located on two tiny coral islands linked using reclaimed land.