India-Sri Lanka relations: Forging mutually beneficial connection
From a geo-strategic and cultural point of view, Sri Lanka occupies a pivotal position within India's ‘neighbourhood first’ framework and this significance has only amplified as New Delhi has emerged as a key player in the Indo-Pacific region
Over the course of time, India has consistently demonstrated its role as a reliable security provider across the sub-continent.
Whether responding to crises such as water and armed group attacks in the Maldives, the 2015 earthquake in Nepal, cyclones in Bangladesh, Chinese aggression at the Bhutanese border, or the economic challenges faced by Sri Lanka, India has consistently emerged as the foremost responder when its neighbouring nations have faced adversity.
This unwavering support from India has not only garnered the trust of its immediate neighbours but also solidified its position as a reliable partner.
In this context, a recent interview with Milinda Moragoda, the High Commissioner of Sri Lanka to India, sheds light on the deepening relationship.
Moragoda stated, “Given its strategic location and proximity to the Indian mainland, Colombo's security concerns naturally align with those of New Delhi. This alignment is the very reason why our island nation views India as the 'anchor' within the Indo-Pacific strategic framework in the Indian Ocean.”
During the preceding month, the Sri Lankan Prime Minister's visit underscored his confidence in India, highlighting the significance of enhancing air and sea connectivity between the Northern regions of the island and South India.
In a collaborative accord with Prime Minister Narendra Modi, he also affirmed the commitment to fortify the multi-dimensional bilateral relations, assuaging India's security concerns. This visit unfolded against the backdrop of an ongoing economic turmoil within the island nation.
Sri Lanka's current foreign debt has surged to an alarming $41.5 billion, magnifying the urgency. Demonstrating its steadfast commitment to the 'neighbourhood first' policy, India, as a prompt responder, has extended comprehensive support, totaling approximately $4 billion, including US$1 billion, since 2022, facilitated through various credit lines and currency assistance.
This concerted effort has not gone unnoticed, earning praise from prominent Sri Lankan policymakers who expressed their gratitude, noting that “no other nation has offered Colombo such extensive assistance as rendered by New Delhi.”
Through frequent high-level exchanges and constructive dialogues, a robust development partnership and a profound mutual understanding have emerged between the two nations.
Despite its smaller size and limited resources in comparison to India, Sri Lanka has harboured ambitious aspirations for rapid economic advancement since its independence. In response, India has extended crucial grants to facilitate significant infrastructure development.
Accumulating over time, India's grants to Sri Lanka have now surpassed US$3.5 billion, primarily channeled into numerous community-oriented initiatives. Notable projects include Indian Housing endeavours, the establishment of Emergency Ambulance Services, the construction of hospitals and educational institutions, as well as essential community development infrastructure like drinking water supply and sanitation facilities.
As of July 2021, an impressive roster of over 20 ongoing grant projects spans a diverse array of sectors, encompassing educational institutions, temperature-controlled warehouses, transit accommodations, and cultural centres.
In addition to the development initiatives supported through grants, a multitude of projects have been initiated under the umbrella of Lines of Credit (LoC) schemes.
In the preceding 15 years, spanning up to July 2021, the Export-Import Bank of India extended 11 LoCs--aimed at fostering diverse projects across Sri Lanka. These encompass critical sectors such as railways, highways, defence, and solar energy.
During the recent visit of the Sri Lankan President Ranil Wickremesinghe, both Colombo and New Delhi agreed to enhance maritime, air, and energy connectivity, signifying a pivotal stride forward in their bilateral relations.
India has pledged its unwavering support for Sri Lanka's endeavours in capacity building, specifically in achieving the ambitious goal of deriving 70% of its energy from renewable sources by 2030.
Furthermore, in a concerted effort to ensure a continuous and robust energy supply, India has reaffirmed its commitment to establish a high-capacity power grid interconnection linking the two countries.
This initiative holds the promise of facilitating not only a seamless energy exchange between India and Sri Lanka but also forging a pathway for bi-directional electricity trade encompassing other SAARC nations like Nepal and Bhutan, both possessing substantial renewable energy capacities.
Economic and commercial partnership
India stands as the foremost trading partner of Sri Lanka, a partnership underpinned by the dynamic exchange of goods and services.
In 2021, the total merchandise trade between the two nations reached a notable value of $5.45 billion, a significant increase from the $3.6 billion recorded in 2020, marking a substantial 48% surge.
Central to fostering this trade relationship was the India-Sri Lanka Free Trade Agreement (ISFTA), a crucial accord inked in 2000, which has played a pivotal role in nurturing trade expansion.
In July 2023, during President Ranil Wickramasinghe's visit to New Delhi, a renewed commitment was made to fortify the economic cooperation between the two nations. This commitment encompasses multifaceted initiatives, including the facilitation of mutual investments.
With a focus on policy consistency, the promotion of business-friendly environments, and equitable treatment of investors, both nations aspire to nurture an atmosphere conducive to economic growth.
Amidst Sri Lanka's ongoing economic challenges, a pivotal step to bolster bilateral trade has been taken – the mutual decision to designate the Indian Rupee (INR) as the currency for trade settlements.
Additionally, both countries have embraced the operationalization of UPI-based digital payment mechanisms, a move that is poised to amplify trade interactions across diverse segments, benefiting businesses and individuals alike.
This forward-looking approach is anticipated to stimulate the tourism sector in Sri Lanka, enhancing its appeal to Indian travellers. Notably, India already contributes to over 17% of the annual tourist influx in Sri Lanka.
Beyond its status as the premier trading partner, India emerges as a substantial contributor to Foreign Direct Investment (FDI) inflows in Sri Lanka. As affirmed by the Central Bank of Sri Lanka, India claimed the top position as the leading source of FDI, culminating in an impressive sum of $142 million in 2021.
These investments have predominantly flowed into sectors such as tourism and hospitality, real estate, telecommunications, services, and petroleum retail, marking India's enduring commitment to the socio-economic advancement of its neighbour.
For time immemorial, Sri Lanka has occupied a distinctive position within India's regional policy due to its cultural affinity, strategic geographic location, and shared wealth of maritime resources.
The presence of approximately 4.12 percent of Indian Tamils in Sri Lanka, who trace their ancestry to the Southern Indian states of Tamil Nadu and Kerala, further underscores this cultural interconnection. Beyond these cultural ties, Buddhism has played a unifying role, fostering a strong bond between the two nations.
On the political front, India has consistently advocated for multiparty democracy and the establishment of an all-encompassing society.
During the 1940s anti-colonial movement, leaders of the Indian National Movement wholeheartedly supported Sri Lanka's struggle for freedom. In the post-independence era, India actively engaged in facilitating the resolution of ethnic tensions in Sri Lanka, culminating in 2009.
However, numerous concerns from minorities residing in the north-western region of Sri Lanka remain unresolved. India has proposed addressing these issues by introducing amendments to the existing constitution, aiming for a comprehensive resolution.
The people-to-people interaction between the two nations is rooted in shared ethnic, cultural, and linguistic affinities. Notably, the tapestry of commonalities includes the spiritual thread of Buddhism, which has emerged as a significant bridge among the people.
An illustrative instance of this connection materialized in September 2020, when Prime Minister Modi, in a virtual bilateral meeting, announced a noteworthy $15 million grant dedicated to fortifying and advancing the Buddhist bonds between the two nations.
In a laudable effort to fortify cultural ties, recent collaborative endeavours between the Prime Ministers of both countries have taken shape.
A mutual commitment has been made to elevate awareness and popularize India's Buddhist circuit and Ramayan trails within both nations. This move seeks to bolster tourism while fostering in-depth research into cultural aspects.
Scholarships are a cornerstone of India's further invigorating people-to-people ties. An impressive tally of more than 710 scholarships is extended annually to Sri Lankan students.
Complementing this, the Indian Technical and Economic Cooperation program extends 402 fully-funded slots to officials across various Sri Lankan ministries each year. In a significant development, in July 2023, India has expressed its willingness to establish new higher education and skill development campuses within Sri Lanka, tailored to cater to the specific requirements and priorities of the nation.
Both from a geo-strategic and cultural perspective, Sri Lanka occupies a pivotal position within India's ‘neighbourhood first’ framework. This significance has only amplified as India has ascended as a prominent player within the Indo-Pacific strategy.
Particularly noteworthy is the growing interest China has shown in the broader Indian Ocean region, with Sri Lanka holding special allure. This has prompted concerns for India, emphasizing the need for vigilance.
In this context, fostering a Sri Lanka that stands as a bastion of political stability and economic robustness, through cooperative efforts with India, emerges as a strategic imperative. Such a symbiotic partnership holds the potential to address India's security apprehensions within the Indian Ocean region, effectively countering external pressures.
Concurrently, it also serves to fortify Sri Lanka's resolve against undue influence from extra-regional powers.
**The writer is a Research Fellow at the MP-IDSA, New Delhi; views expressed are personal.