When Anura Kumara Dissanayake (AKD) won the ninth Presidential elections of Sri Lanka in September 2024, Indian media was ripe with headlines alleging that another ‘pro-China’ leader was elected to power in the region. However, nearly six months into power, President Dissanayake is providing much-needed momentum to the already growing India-Sri Lanka relations.
AKD chose India as his maiden destination for foreign visits in December 2024, and in reciprocation, Indian Prime Minister Narendra Modi visited Sri Lanka from 4-6 April. While some key concerns persist between both countries, the visit has placed bilateral ties in the right direction. It demonstrates that personal relations, increased understanding, and grants and investments will likely guide the bilateral ties, especially with this NPP-JVP Government.
To offer a brief overview, India and Sri Lanka signed over 7 MoUs during PM Modi’s visit. The MoUs focussed on digital transformation, electricity grid interconnection, trilateral development of Trincomalee as an energy hub, defence cooperation, multi-sectoral grant assistance for Eastern Province, health and medicine, and pharmacopeia. The visit also witnessed both the leaders virtually inaugurating the Dambulla warehouse, solar rooftop systems for 5000 religious institutions and the groundbreaking of the Sampur Solar project. In the last leg of the visit, PM Modi and President Dissanayake inaugurated the Maho-Omanthai railway line and launched the signaling system for the Maho-Anuradhapura section. However, the visit also highlighted some crucial trends in India-Sri Lanka relations.
Nurturing personal relations
There is little secrecy surrounding the JVP’s past, which is mired in an anti-India stance and their opposition to Indian projects and economic liberalization. These perceptions and interactions had largely triggered concerns in Delhi about AKD’s anti-Indian stance. While AKD, accompanied by three key members of the National People’s Power (NPP), visited India for five days in early 2024 as a part of a cultural exchange programme, the direction of his foreign policy was largely unclear. Credit where it is due – AKD has quickly cracked the code of South Asian diplomacy by building personal relations with the Indian leadership.
By choosing India as his first foreign destination and grandly welcoming PM Modi to Sri Lanka, AKD has been quick to foster a personal relationship with the Indian PM. He also conferred PM Modi with the ‘Sri Lanka Mitra Vibhushan’ award – the highest civilian honour for the Heads of State and Government. On multiple occasions, both the leaders posted on X calling each other as a “friend.” This personal relationship will not only help AKD get rid of his anti-Indian tag and skepticism within the Indian establishment, but will also go a long way in facilitating more honest conversations between both countries. If rightly leveraged, these personal relations could help the Sri Lankan Government to leverage India’s growth and connectivity and recover, grow, and develop the country into a maritime, port, trading, and logistics hub.
Increased understanding
Another visible trend from this visit is increased mutual understanding and trust between both countries. On India’s part, PM Modi has omitted mentioning the 13th amendment from his media statement for the second time. This was despite the Indian PM meeting leaders of the Opposition, including Tamil leaders and leaders of Indian-origin Tamils, during the visit. Thereby, hinting at Delhi’s understanding of the new dispensation and the possibility of looking beyond the 13th amendment to resolve the Tamil issue, as the new Government has expressed its desire to change the Constitution. That said, India has emphasised fulfilling the aspiration of Tamils and conducting the Provincial Council Elections.
Similarly, there seems to be an increasing understanding that India and Sri Lanka’s security are intertwined and interconnected. Incidentally, AKD has assured India that Sri Lanka’s territory will not be used to hinder Indian security and regional stability. At a time when Sri Lanka is keen on promoting defence reforms and playing an active role in the Indian Ocean Region, India is also strengthening its security architecture and exploring new partnerships. This is evident from India’s SAGAR (Security and Growth for all in the Region) vision getting elevated to MAHASAGAR (Mutual and Holistic Advancement for Security and Growth Across Regions).
Both countries, thus, see their best interests in strengthening bilateral defence relations. This explains their signing of the MoU on defence cooperation. The MoU is an umbrella framework document that strengthens and structures pre-existing defence cooperation between India and Sri Lanka. It will facilitate more joint exercises, capacity building, HADR operations, increase Port calls, and lead to more defence industry cooperation in the future. Helping Sri Lanka with its capacity building is also India’s best bet to deter increasing Chinese defence and security cooperation in the region, and the Sri Lankan Government’s willingness to sign the MoU displays its understanding of Indian concerns.
People-centric and investment-led growth
Another key trend is India’s emphasis on people-centric and investment-led growth. In 2022, when Sri Lanka faced economic hardship – India put forth a four-pillar strategy to address Sri Lanka’s immediate and long-term concerns. Indian assistance, summed up to US dollars ($) 4 billion, took the form of loans, currency swaps, grants, lines of credit, and humanitarian relief. India was among the first countries to restructure Sri Lanka’s external loans. It is now leveraging this assistance to further bilateral ties between both countries and help the Sri Lankan populace across ethnic and religious lines. As a result, its assistance is taking the form of grants or investments – which would help Sri Lanka recover without further debt burdens.
During the recent visit, India concluded the debt restructuring process by exchanging bilateral agreements. It also assured that the Government will reduce the interest rate for bilateral loans, and reiterated that loans worth $ 100 million were converted to grants over the last 6 months alone. Currently, India is in the process of completing projects worth around $ 180 million in grants. Furthermore, it has finalized an MoU for 33 development projects in the Eastern Province worth Rs. 2.37 billion ($ 8 million), focusing on livelihood, agriculture, and capacity building. Key infrastructure projects like the upgrading of Kankesanthurai (Jaffna) Port also take the form of a grant.
India is also helping the country with solar rooftop systems for 5000 religious institutions through a line of credit, demonstrating that its assistance is spread across ethnic and religious lenses. Other key projects include the joint-ventured (JV) Sampur solar power project, investments to promote Trincomalee as an energy hub, and the West Container Terminal project – which commenced its operations this week. India and Sri Lanka signed the MoU with UAE on cooperation and the development of Trincomalee as an energy hub. The MoU facilitates all three parties to cooperate in the energy sector including the restoration of oil tank farms and establishing a multi-product pipeline with South India.
The emphasis on connectivity, grants, and investments would help Sri Lanka ensure its energy security, promote economic growth, and boost revenues through energy exports. The nature of these projects with more private sector involvement and JVs with Sri Lankan companies could (to some extent) also help reduce nationalist rhetoric and narratives against privatisation, foreign investments and Indian projects. It would also assuage broader concerns about India’s intentions in the country.
Challenges
While the visit has put bilateral ties in the right direction, multiple concerns persist. The fisherman issue continues to face a bigger divergence. While India has stressed to look at the issue through a humanitarian approach, Sri Lanka’s Tamil as well as national leaders have called to ban bottom trawling and stop the practice of illegal fishing. Even as the Ministry of External Affairs urged that “certain actions could be reconsidered,” and the Joint Working Group meeting is scheduled to take place soon, tensions on the ground seem to be peaking. Clashes are growing more violent, and to complicate matters the Tamil Nadu assembly unanimously passed (including the BJP legislators) the bill to retrieve Katchatheevu.
China’s ability to invest, offer grants, resume paused projects, and cooperate on maritime security would trigger some concerns in India. Given its influence and economic base, Chinese incentives, investments, and pressure would be too difficult to ignore for AKD. This will likely create fresh challenges for Delhi. Sri Lanka has also urged India to help the country extend its continental shelf beyond the Exclusive Economic Zone, while India continues to hold some reservations against this expansion.
The visit has also missed emphasising upon certain crucial issues. There seems to be a limited discussion about fostering trade between the countries. The progress of ETCA also remains little known, despite the US tariffs affecting both countries badly. Having won the elections on transparency and accountability, the AKD Government has also developed a cold feet for some Indian projects like the land bridge project, the Adani wind projects, and the Hambantota airport. The Government has also stepped back on the privatisation of SOEs. These issues seem to have gained little attention as well.
PM Modi’s recent visit to Sri Lanka builds upon the momentum of already expanding ties. The visit also hints at three broader trends – growing personal ties, increased understanding of each other’s concerns and interests, and focus on grants and investment-led growth. This will likely define India-Sri Lanka relations in the coming days. While some issues like the fisherman issue, politicisation of projects, and increasing Chinese presence remain unresolved, it is yet to be seen to what extent this newfound momentum and synergy could address these concerns.
(Shivamurthy is an Associate Fellow with the Strategic Studies Programmes at the Observer Research Foundation)
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The views and opinions expressed in this article are those of the author, and do not necessarily reflect those of this publication