Introduction of India-Sri Lanka Relations
- Sri Lankan President Anura Kumara Dissanayake’s recent visit to India from December 15-17, 2024, marked an important chapter in the diplomatic relationship between the two nations.
- This visit, his first international trip since assuming office, centered on bolstering bilateral ties across critical sectors, including economic cooperation, regional stability, energy security, and defense commitments.
- Amid global geopolitical changes, especially the growing influence of China in the Indian Ocean, this visit underscores the importance of strengthening India-Sri Lanka relations.
Key Outcomes of the Visit
- Economic Cooperation:
- During his visit, President Dissanayake thanked India for its significant financial assistance, which was crucial in stabilizing Sri Lanka’s economy after the 2022 financial crisis.
- The two countries discussed several avenues for further economic collaboration, including the establishment of an electricity grid connection and a multi-product petroleum pipeline.
- These initiatives aim to ensure energy security and deeper economic integration between India and Sri Lanka. India has pledged to supply LNG gas to Sri Lanka.
- Defense and Security Commitments:
- In a joint statement with Indian Prime Minister Narendra Modi, Sri Lanka reaffirmed its commitment to not allowing its territory to be used in a manner that threatens India’s security interests.
- This commitment is particularly significant as both countries face increasing concerns about China’s growing presence in the region.
- President Disanayaka also thanked India for its support through the provision of a Dornier Aircraft for maritime surveillance; and establishment of the Maritime Rescue and Coordination Centre in Sri Lanka.
- Development Projects:
- Several key development initiatives were announced, including the Indian Housing Project and renewable energy projects designed specifically for Sri Lanka’s Tamil community.
- Additionally, India agreed to train 1,500 Sri Lankan civil servants over the next five years, reinforcing India’s long-term support for Sri Lanka’s governance and development needs.
- India agreed to foster cooperation between Start-up India and Information Communication Technology Agency of Sri Lanka (ICTA).
- Regional Stability:
- The visit also underscored the shared commitment to regional stability, with both nations reaffirming their dedication to fostering peace and security in the Indian Ocean region.
- The two sides agreed to continue working together on multilateral platforms like the Colombo Security Conclave to address challenges such as maritime piracy and terrorism.
- People-Centric Digitization:
- India agreed to expedite implementation of Sri Lanka Unique Digital Identity (SLUDI) project to aid the country in its efforts to improve delivery of government services to the public and collaborate on avenues to fully roll out Digital Public Infrastructure (DPI) in Sri Lanka with assistance from India.
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A Shared History: India and Sri Lanka’s Deep Ties
- Ancient Cultural and Religious Connections India and Sri Lanka have a rich, shared history that spans more than 2,500 years, marked by cultural, religious, and linguistic ties. Buddhism, introduced to Sri Lanka through Emperor Ashoka’s missionary efforts, serves as one of the strongest cultural links between the two nations, laying a foundation for a longstanding relationship built on shared heritage.
- The Sri Lankan Civil War and India’s Involvement In the 1980s, India’s relationship with Sri Lanka became strained due to the Sri Lankan Civil War. India intervened in the conflict through the 1987 Indo-Sri Lankan Accord, aiming to provide autonomy to Tamil-majority areas and secure peace. However, the deployment of the Indian Peace Keeping Force (IPKF) led to military casualties and significant backlash, which ultimately resulted in India’s withdrawal in 1990.
- Post-Civil War Relations: After Sri Lanka’s civil war ended in 2009, India became a key player in Sri Lanka’s reconstruction efforts. However, relations were often strained due to differing positions on human rights issues related to the war, particularly the treatment of the Tamil minority.
- Multilateral Forum Collaboration: India and Sri Lanka actively participate in regional organizations such as the South Asian Association for Regional Cooperation (SAARC), South Asia Co-operative Environment Programme, South Asian Economic Union, and BIMSTEC. These platforms aim to strengthen cultural and commercial ties between the two nations.
India’s Support During Sri Lanka’s Economic Crisis
- In 2022, Sri Lanka faced a severe economic crisis, which led India to provide significant assistance to stabilize the island’s economy. India’s support, amounting to approximately $4 billion, came in the form of credit lines, currency swaps, and debt restructuring support:
- Credit Lines and Currency Support: India extended a $400 million currency swap and deferred trade liabilities of around $500 million.
- Debt Restructuring Support: India was the first country to provide a letter of support for Sri Lanka’s debt restructuring process with the IMF, facilitating its engagement with the international community.
- Humanitarian Aid: India sent essential humanitarian aid, such as food, medicine, and other critical supplies, to alleviate the hardships faced by the Sri Lankan population during the crisis.
- As a result of this significant assistance, India achieved several strategic outcomes, including:
- Trincomalee Oil Tank Farm Development: India secured a deal to develop the strategically significant Trincomalee oil tank farm.
- Sampur Power Plant Development: India’s National Thermal Power Corporation (NTPC) plans to develop a 100-megawatt power plant at Sampur, leveraging the Trincomalee harbor’s strategic location.
- Cancellation of Chinese Projects: Sri Lanka also canceled a Chinese company’s license to build a micro electricity grid near India’s border, responding to India’s concerns over national security.
Strategic Importance of Sri Lanka for India
- Strategic Location and Maritime Security: Sri Lanka’s strategic location in the Indian Ocean is crucial for India’s national security and economic interests. The East-West maritime route passing around Sri Lanka is a key global shipping lane that carries two-thirds of the world’s oil and half of the world’s container traffic. Ensuring the security of these sea lanes is critical to India’s economic stability and regional influence.
- Furthermore, Sri Lanka’s ports, especially Hambantota, hold the potential to become key maritime hubs, making it vital for India to safeguard the region from any threats that may arise due to foreign influence, particularly China’s increasing presence.
- Geographical Proximity: Sri Lanka’s proximity to India enhances its strategic significance. India has heavily invested in Sri Lanka’s recovery since the end of the civil war, further deepening bilateral ties. The growing Chinese footprint in the region has only increased India’s interest in ensuring that Sri Lanka remains aligned with India’s security and economic interests.
Positive Developments in India-Sri Lanka Relations
- Trade and Investment: India-Sri Lanka relations have flourished in the economic sphere, with India being Sri Lanka’s largest trading partner. Bilateral trade reached $5.5 billion in 2022, aided by the India-Sri Lanka Free Trade Agreement (ISFTA) signed in 2000. India has also become one of Sri Lanka’s largest foreign investors, contributing over $2.2 billion in Foreign Direct Investment (FDI).
- Development Assistance: India has been a significant development partner for Sri Lanka, with commitments exceeding $3.5 billion. India’s development assistance spans various sectors, including education, healthcare, housing, and industrial development. India’s approach to development is people-centric and demand-driven, ensuring that projects align with Sri Lanka’s specific needs.
- Maritime Cooperation: The two countries have also enhanced their maritime security collaboration. India and Sri Lanka conduct a joint Military exercise named ‘Mitra Shakti’, Trilateral Maritime Exercise “Dosti”, and a Naval exercise named SLINEX. Furthermore, Sri Lanka’s coastal surveillance radars are integrated into India’s International Fusion Center – Indian Ocean Region (IFC-IOR), enhancing the overall security architecture of the region.
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Concerns India Has with Sri Lanka
- China’s Growing Influence: One of India’s primary concerns in Sri Lanka is the rising Chinese influence. China’s involvement in key infrastructure projects such as the Hambantota Port and the construction of an airport in Colombo has sparked unease in New Delhi. India is concerned about the transparency of these projects and the potential military and strategic ramifications of increased Chinese presence in Sri Lanka.
- Security Concerns: The regular visits of Chinese naval vessels, including submarines, to Sri Lankan ports are a significant security concern for India. India views this growing Chinese naval presence as a challenge to its maritime security, especially given the strategic location of Sri Lanka.
- Unresolved Maritime Disputes and the Tamil Issue: Despite the Indo-Lanka Maritime Boundary Agreement of 1974, maritime disputes, particularly the Katchatheevu Island issue, remain unresolved.
- Indian fishermen continue to face difficulties when crossing into Sri Lankan waters, resulting in frequent encounters with the Sri Lankan Navy.
- Additionally, India is concerned about Sri Lanka’s lack of progress in addressing the Tamil community’s demands for greater autonomy, particularly the full implementation of the 13th Amendment to the Constitution, which would grant the Tamil minority greater political power.
Way Forward
- Addressing Security Concerns:
- India must ensure that Sri Lanka’s territory is not used for activities that undermine its security, particularly the growing Chinese influence in the region.
- Diplomatic Engagement:
- India should continue to use its diplomatic channels to ensure that critical infrastructure projects, such as the Adani-backed renewable energy project, are not hindered by political pressures in Sri Lanka.
- Wait-and-Watch Approach:
- A cautious, wait-and-watch approach, similar to India’s stance toward the Maldives, is recommended to avoid hasty decisions and allow both countries to assess evolving situations.
- Strengthening Existing Frameworks:
- Both nations should continue to operate within the established frameworks such as India’s ‘Neighbourhood First’ policy and the ‘SAGAR’ (Security and Growth for All in the Region) initiative, which emphasize regional cooperation and security.
- Expanding B2B Ties with Southern Indian States:
- Broaden engagement beyond Tamil Nadu to include all four southern Indian states.
- Promote collaborations through smaller business chambers and firms, focusing on MSMEs, which are the economic backbone of both countries.
- Encourage inbound business visits and participation in trade fairs to foster trust and enable tangible deals.
- Focus on specific sectors such as food processing, textiles and garments, auto parts, and IT-related services.
- Regional Production-Linked Incentive (PLI) Scheme in Sri Lanka:
- Pilot a regional PLI scheme to attract Indian businesses to manufacture sophisticated products in Sri Lanka, such as solar panels.
- Support India’s China+1 strategy by building regional supply chains and reducing risks associated with overseas investments.
- Strengthen Sri Lanka’s capabilities in green energy and energy security sectors.
- Upgrading the India-Sri Lanka Free Trade Agreement (FTA):
- Resume bilateral trade negotiations to finalize an early harvest investment agreement by 2025 and a comprehensive trade deal by 2026.
- Expand the agreement to cover goods, services, investments, and trade facilitation while addressing new trade issues like intellectual property, competition policy, and government procurement.
- Enhancing Physical Connectivity:
- Increase air connectivity through additional flights by Indigo and Air India to Colombo airport.
- Leverage the modernized Palaly Airport in Jaffna for flights to and from South India.
- Promote the restarted ferry service covering 60 nautical miles from Nagapattinam to Kangesanthurai.
- Highlight successful co-financed projects like the Adani Group and John Keels Holdings’ investment in Colombo port’s West Container terminal, facilitating Indian transshipment.
- Strengthening Northern Sri Lanka Infrastructure:
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- Utilize Indian aid and Sri Lankan public expenditure to finance projects in northern Sri Lanka.
- Improve trade and tourism prospects through enhanced connectivity and infrastructure.
