The Maldives said on Monday it would ignore a court ruling staying its decision to kick out Indian infrastructure group GMR, threatening to deepen a row with New Delhi which has threatened to cut off aid.
GMR, which won a 25-year contract to manage and upgrade the main international airport in the Maldivian capital under the former government, was given five days to leave the country last week by President Mohammed Waheed's administration.
The privatisation deal has been targeted by Waheed and others in the government over alleged corruption and for patriotic reasons, leading to fury in India, the regional power.
GMR said Monday it had won "injunctive relief" against the decision in the Singapore High Court, where arbitration was being heard, but the Maldivian government said it would ignore the ruling.
The decision to terminate the lease was "non-reversible and non-negotiatible", government spokesman Masood Imad told AFP from the capital Male. "We will not accept the (interim) order," he added.
India, whose influence faces competition from China in the Indian Ocean, warned its neighbour on Monday that it might freeze annual aid worth $25 million due in 2013 after a review of the airport decision.
The treatment of GMR has also raised concerns about the investor climate in the Maldives at a time when the country is seeking foreign financing for tourism projects after a year of political turmoil.
"We are not happy with the way Maldives cancelled the GMR airport deal. This has surely left an impact on our bilateral ties," an Indian foreign ministry official told AFP in New Delhi, asking for anonymity.
A second official in the ministry said next year's financial aid of $25 million would be provided only "after every aspect of the airline deal is reviewed".
"A decision whether the money should be given or not will be taken soon," he said, also on condition of anonymity.
Bangalore-based GMR Infrastructure signed the deal to manage the airport in 2010 under former President Mohamed Nasheed, the country's first democratically elected leader who was ousted after violent protests in February this year.
Nasheed's deputy, Mohamed Waheed, assumed the presidency in what the former government initially described as a "coup" but which has since been judged a legal transfer of power.
Earlier this month, senior Indian officials in New Delhi welcomed an injured opposition Maldivian politician who claimed he was beaten up by police in what was viewed by some as a sign of concern in India about political violence.
New Delhi is also eyeing growing Chinese influence in the Maldives, where Chinese visitors are now the most numerous tourist group and where Beijing opened an embassy in November last year.
Officials at GMR termed the Singapore court verdict staying the cancellation order as a "victory of light over darkness".
"The government of Maldives had made a unilateral move and completely irrational move and the court recognised it," a senior GMR official told AFP.