India and Sri Lanka tighten economic alliance

During Sri Lanka President Ranil Wickremesinghe’s visit to India, both countries’ leaders have pledged to enhance economic and energy relations and explore the possibility of constructing a land link between them.

Wickremesinghe’s official visit to New Delhi came after an economic crisis that led to his predecessor’s departure. India played a crucial role in supporting Sri Lanka during this challenging time, providing nearly $4 billion in assistance between January and July last year.

Indian Prime Minister Narendra Modi expressed solidarity with the people of Sri Lanka, and the two leaders adopted a “vision document” for their Economic Partnership. The document outlines plans to strengthen maritime, air, energy, and people-to-people connectivity. It also aims to boost cooperation in tourism, power, trade, higher education, and skill development.

Among the significant initiatives are projects to connect the electricity grids of the two nations via undersea cables and explore the feasibility of constructing a petroleum pipeline and a land bridge across the Palk Strait. The land bridge would grant India access to the ports of Trincomalee and Colombo and reinforce the strong historical relationship between the two neighbours.

The cost of the electricity grid and oil pipeline projects is estimated to be around $4 billion. Additionally, India and Sri Lanka are set to resume negotiations on a comprehensive trade deal, the Economic and Technological Cooperation Agreement.

Wickremesinghe expressed gratitude for India’s support during the challenging period and updated Modi on the measures his government is taking to address the financial crisis. India remains a crucial creditor to Sri Lanka with $1.9 billion in outstanding debt.

This visit signifies the importance of India’s role in helping Sri Lanka reset its economy and decision-making systems. While India and Sri Lanka have long-established strong ties, the strategic location of the island has made it a focal point in the rivalry between India and China in the Indian Ocean region.

The two leaders also expressed their support for the implementation of an India-backed power-sharing scheme with Sri Lanka’s ethnic minority Tamil population in the northern and eastern provinces. Addressing the historical ethnic conflict, Wickremesinghe presented Modi with a proposal for reconciliation and power-sharing, aiming to fulfill the aspirations of the Tamil community.

Overall, the visit marks the beginning of a new chapter in India-Sri Lanka relations, strengthening economic ties and fostering cooperation for a more prosperous future.