Debt-ridden Sri Lanka seals key deals with India
India and Sri Lanka have agreed to boost air and maritime connectivity, and will explore the feasibility of a petroleum pipeline and land bridge. These were among the key deals reached in the areas of trade, energy, tourism and fintech during a visit to New Delhi by Sri Lankan President Ranil Wickremesinghe, who is marking his first year in office.
The two nations agreed on an ambitious program to significantly ramp up economic partnerships and improve connectivity after Wickremesinghe held wide-ranging talks with Prime Minister Narendra Modi and other Indian officials and business leaders on Friday.
Recalling the civilizational ties and interpersonal links between India and Sri Lanka, Modi said bilateral talks on the Economic and Technological Cooperation Agreement (ECTA) would soon recommence after stalling following 11 rounds of discussions.
Several key announcements were made in the area of physical connectivity between the two countries. These included plans to enhance air connectivity and establish a passenger ferry service between Tamil Nadu’s Nagapattinam and northern Sri Lanka’s Kankesanthurai. Modi also said New Delhi and Colombo had decided to conduct feasibility studies to establish a petroleum pipeline and a land bridge connectivity project between the two countries.
They also decided to fast-track work to connect electricity grids and establish an energy and industry hub in Sri Lanka’s Trincomalee district, where the closest port to India’s Chennai is located. The project could be seen as competing with China, which also has major geostrategic interests in Sri Lanka as part of its Belt and Road Initiative (BRI).
The Indian prime minister announced that India’s instant payments system, Unified Payments Interface (UPI), would soon be available in Sri Lanka. This will enable better engagement between the two nations in the fintech domain. Indian Foreign Secretary Vinay Mohan Kwatra told reporters on Friday that the UPI mechanism is likely to be operationalized in the next two to three months.
“Colombo already accepts the Indian rupee as a payment mechanism for the settlement of bilateral trade,” he added.In a joint address to the media, Modi recalled how India had stood “shoulder-to-shoulder” with the Sri Lankan people like a “close friend” during the country’s worst economic crisis last year.
Wickremesinghe, who has been the Prime Minister of Sri Lanka on six occasions and who continues to be a key ally of New Delhi in its ‘Neighborhood First’ approach, as well as its ‘Vision SAGAR’ (Security and Growth for all in the Region), acknowledged India’s role in extending financial support of about $4 billion to Sri Lanka in 2022. This provided relief to 22 million Sri Lankan citizens who struggled due to critical shortages of essentials. India also helped Colombo to secure a $2.9 billion bailout package from the International Monetary Fund (IMF) by providing guarantees sought by the multilateral organization. “India’s role would be beneficial to the neighborhood and the Indian Ocean region,” the president said, adding that his nation was “focused on an economic growth path.”
Modi took the opportunity to urge Wickremesinghe to ensure a “life of dignity and respect” for the Indian-origin Tamil minority in Sri Lanka as the community marks the 200th anniversary of their arrival in the island nation. The Indian prime minister also unveiled a package of 750 million rupees ($9.15 million) for various development projects targeting Indian origin Tamils.
Modi responded to Sri Lankan concerns about its Tamil fishermen, whose livelihoods are severely affected by Indian fishing vessels using the environmentally destructive bottom-trawling method in the Palk Strait. The Indian PM said a “humanitarian approach” would be adopted to mitigate their plight.
The Sri Lankan president also met billionaire and business tycoon Gautam Adani, chairman of Adani Group, to discuss multiple infrastructure projects in the country, including the ongoing development of a container terminal in Colombo and two wind-power projects with a combined capacity of 500MW.
