INDIA SRI LANKA RELATIONS

Published on 03 Jan 2025

The relationship between India and Sri Lanka is more than 2,500 years old. Both countries have a legacy of cultural, religious and linguistic interaction.

Why is Sri Lanka important to India?

✔     Political

●      India's Security Interests: Sri Lanka's strategic value is critical for India's security, and any hostile developments in Sri Lanka pose significant challenges.

●      Maritime Crossroads: Sri Lanka's location at key sea lanes connecting Europe to East Asia and enabling Gulf oil tanker routes significantly impacts global maritime trade.

✔     Economic Significance

●      Maritime Trade Routes: Sri Lanka's geographic positioning influences global trade by serving as a crucial transit point for sea routes between Europe, East Asia, and the Gulf.

●      Deepwater Ports: Sri Lanka's deepwater are attractive to global powers

o   Example: Hambantota Port has been leased by China

✔     Security Implications

●      Belt and Road Initiative Impact: Sri Lanka's involvement in China's Belt and Road Initiative, including investments in its ports, has security implications for the region.

●      Indian Ocean Strategy: Sri Lanka plays a central role in India's strategy for the Indian Ocean, influencing regional security dynamics.

Areas of Cooperation

✔     Economic

●      Trade Relations: India is a major trade partner of Sri Lanka.

o   Example: The India-Sri Lanka Free Trade Agreement (ISFTA), signed in 1998, governs their trade relations.

●      Investment: India also contributes significantly to Foreign Direct Investment (FDI) in Sri Lanka.

o   Example: The total FDI from India so far exceeds US$ 2.2 billion.

●      Tourism and Exchange: India is the largest source of tourists to Sri Lanka, accounting for over 18% of total arrivals.

●      Financial Support: India provides financial assistance

●      Example: RBI provided a USD 400 million currency swap to bolster Sri Lanka's foreign reserves amid the COVID-19 pandemic.

●    Infrastructure: India is a major infrastructure development partner.

o   Example: Adani Group secured a 35-year agreement to build and operate the West Container Terminal at Colombo Port.

●      Developmental cooperation: India remains actively involved in supporting numerous High Impact Community Development Projects across Sri Lanka.

o   Example: Indian Housing Project, Emergency Ambulance Service

✔     Cultural

●      Historical and Religious Ties: Buddhism's introduction to Sri Lanka in the 4th century BC by Ashoka's children and the connection to the Ramayana epic.

●      Promoting Indian Culture: The Indian Cultural Centre in Colombo offers classes in music, dance, Hindi, and Yoga to promote Indian culture in Sri Lanka.

●      Historical and Religious Ties: Ties rooted in Buddhism have shaped people-to-people relations.

o   Example: Collaboration on the 'Ramayana Trail' in Sri Lanka and the 'Buddhist Circuit' in India

●      Preservation and Restoration: India is engaging in cultural preservation to enhance soft power.

o   Example: Participation in projects like the International Buddhist Museum in Kandy and the restoration of the Thirukeeteswaram Temple in Mannar to safeguard cultural heritage.

✔     Security

●      Military Exercises: India and Sri Lanka conduct joint military exercises

o   Example: 'Mitra Shakthi' and naval exercises 'SLINEX.'

●      Defence Training: India provides extensive defence training programs for Sri Lankan soldiers and officials.

●      Counter-Terrorism Cooperation: Following the Easter bombings in Sri Lanka, India and Sri Lanka have intensified their cooperation in counter-terrorism efforts.

o   Example: India has pledged USD 50 million in financial assistance for counter-terrorism initiatives.

✔     Social

●      Education and Training: India offers scholarships to Sri Lankan students for studies in India and provides training opportunities under various schemes

o   Example: Colombo Plan Technical Cooperation Scheme

●      Nuclear: A bilateral agreement on Civil Nuclear Cooperation covers various areas of mutual interest, including applied nuclear research.

●      Science: Increasing cooperation in areas of science and technology.

o   Example: The South Asia Satellite (SAS) was launched in 2017, with Sri Lanka being the first country to join the program.

✔     Energy

●      Clean energy: India is supporting Sri Lanka in its green energy initiatives.

o   Example:  Sri Lanka received a $100 million loan from India to install solar rooftop systems

✔     Challenges in India - Sri Lanka Relations

✔ Political

●      Political instability: Frequent changes in government and leadership in Sri Lanka leading to political instability affects its ability to engage with India.

●      Katchatheevu Island Dispute: India recognizes Sri Lanka's sovereignty over Katchatheevu Island but Tamil Nadu doesn’t, leading to tensions.

●      Ethnic Conflict: The enduring conflict between Sri Lanka's Sinhala majority and Tamil minority has significantly strained bilateral relations in recent years.

✔     Geopolitical

●      China Factor: China's development of Colombo and Hambantota ports under the Maritime Silk Route policy

o   Example: Presence of Chinese spy vessels in these ports

✔     Security

●      Fisherman Dispute: Sri Lanka's concerns about illegal fishing by Indian fishermen in its territorial waters.

●      Fishermen arrests: Regular arrests of Indian fishermen for crossing the International Maritime Boundary Line.

Sri Lanka’s economic crisis and India’s role in addressing the crisis

Sri Lanka faces an economic crisis due to a significant imbalance in its Balance of Payments (BoP), depleting foreign exchange reserves and hindering essential imports. ✔     Its economy relies heavily on colonial-era exports like tea, while it depends on imports even for crucial sectors like tea production. ✔     Fiscal issues stem from increased state spending and a lack of effective tax policies, leading to a budget deficit. ✔     Reckless borrowing practices, especially from China, have inflated Sri Lanka's foreign debt, now standing at around $50 billion. ✔     The COVID-19 pandemic impacted the tourism sector, a significant part of the economy. ✔     A ban on chemical fertilizers in 2021 led to reduced crop yields and ongoing agricultural challenges. ✔     Amid public pressure, President Rajapaksa resigned, making way for Ranil Wickremesinghe to assume leadership.

 

Impact on India-Sri Lanka Relations

✔     Economic Crisis Catalyst: The ongoing economic crisis in Sri Lanka has breathed new life into the strained bilateral relationship between India and Sri Lanka.

✔     Trustworthiness Factor: Sri Lanka sought assistance from both India and China, and India's reliability in providing support has been more pronounced compared to China.

✔     Significant Indian Aid: India has extended substantial financial assistance to Sri Lanka since January 2022, amounting to $2.4 billion. This includes currency exchange, loan defer

Way Forward

✔     Strengthening Democratic Ties: Leveraging India's resources in fields like IT and technical education can enhance collaboration and foster a positive perception of India among Sri Lankans through programs like ITEC and the Colombo Plan, including student exchanges.

✔     Economic Cooperation: A contemporary economic agreement and projects like the Palk Strait Bridge and the Economic Integration Roadmap (EIRM) can bolster economic ties, connecting over 300 million people and a $500 billion GDP.

✔     Private Investment and Infrastructure: India should deepen private investments in Sri Lanka, particularly in infrastructure, energy, and connectivity, with a focus on timely implementation.

✔     Collaborative Approach: India, in partnership with like-minded nations like Japan, can offer sustainable terms for infrastructure, defence, and counter-terrorism capabilities, leveraging initiatives like the Asia and Africa Growth Corridor.

✔     Counter-Terrorism Cooperation: Establishing a formal India-Sri Lanka Joint Working Group on Countering Terrorism can enhance security cooperation, with India sharing best practices and aiding Sri Lanka in counter-terrorism efforts, particularly in maritime surveillance.

India should leverage its civilizational and cultural connect with Sri Lanka and ensure that its economic engagement produces concrete outcomes.

Tags:
Polity

Keywords:
Srilanka Belt and Road Initiative Buddhism Katchatheevu

Syllabus:
General Studies Paper 2

Topics:
India and Its Neighbors