India - Sri Lanka Relations
Wed, 30 Mar 2022

India - Sri Lanka Relations

In News

Amid ongoing historic economic crisis in Sri Lanka, India and Sri Lanka inked six agreements to boost bilateral cooperation.

Details of the Agreement

  • The MoUs include implementation of Sri Lanka Unique Digital Identity (SL-UDI) programme with India’s grant assistance and for providing Maritime Rescue Coordination Center.
  • There is an MoU on implementation of Hybrid Power Projects in three Islands off Jaffna and also on cooperation in development of Fisheries Harbours in Sri Lanka.
  • The two sides signed MoUs for the establishment of modern computer labs and smart boards with customised curriculum software in 200 schools in Galle District and a separate MOU between Sushma Swaraj Institute of Foreign Service and the Bandaranaike International Diplomatic Training Institute.

Background of India-Sri Lanka Relations

  • Sri Lanka is India’s closest maritime neighbour and is just 30 nautical miles away from the territorial boundary. India and Sri Lanka have a legacy of intellectual, cultural, religious, and linguistic interaction and the relationship between two countries is more than 2500 years old.
  • The nearly three-decade long armed conflict between Sri Lankan forces and the LTTE came to an end in May 2009. While India supported the right of the Government of Sri Lanka to act against terrorist forces, it also emphasized that the rights and welfare of civilian population should not get enmeshed in hostilities against the LTTE.
  • Bilateral relations are shaped through key agreements like the Indo-Sri Lanka Free Trade Agreement (ISFTA), which has provided much impetus for bolstering economic ties. In addition, joint participation in international platforms such as the SAARC and the BIMSTEC have driven bilateral cooperation.
  • In last 2-3 months, India is also helping Sri Lanka which is in the grips of one of its worst economic meltdowns in history. Sri Lanka is facing the fears of a sovereign default and an extremely low $1.6 billion foreign reserves.
    • This reduced capacity to import essentials such as food, fuel, and medicines, made the start of the year 2022 on a rather challenging note, marked by further shortages and an economic upheaval.

Broad Contours of India- Sri Lanka Relations

  • Political Relations: There are regular high-level exchanges of visits at Presidential and Prime Ministerial levels. Also, External Affairs Minister (EAM) visits are also frequent.
    • Various mechanism such as SAARC, BIMSTEC, Colombo Process (CP), India-Sri Lanka Joint Commission, ‘India- Sri Lanka-Maldives’ trilateral mechanism exist for bilateral and multilateral political dialogues.
  • Commercial Relations: In 2020, India was Sri Lanka’s 2nd largest trading partner with the bilateral merchandise trade amounting to about USD $ 3.6 billion. Sri Lankan exports to India have increased substantially since 2000 when India-Sri Lanka Free Trade Agreement (ISFTA) came into force and more than 60% of Sri Lanka’s total exports to India over the past few years have used the ISFTA benefits.
    • FDI: In addition to being Sri Lanka’s largest trade partner, India is also one of the largest contributors to Foreign Direct Investment in Sri Lanka. FDI from India amounted to about US$ 1.7 billion during the period 2005 to 2019.
  • Development Cooperation: With grants alone amounting to around USD 570 million, the overall commitment by India is to the tune of more than USD 3.5 billion. Demand driven and people-centric nature of India’s development partnership with Sri Lanka have been the cornerstone of this relationship.
    • Various projects include completion of close to 50000 houses under the Indian Housing Project; country-wide 1990 Emergency Ambulance Service and supply of defence equipment; upgradation of railway line from Colombo to Matara; supply of engine kits for buses, diesel locomotives railways etc.
    • A US$ 100 million LoC for undertaking solar projects in Sri Lanka has been signed between Sri Lanka and EXIM Bank in 2021.
  • Cultural relations: The Cultural Cooperation Agreement signed by both the countries in 1977 forms the basis for periodic Cultural Exchange Programmes between the two countries.
    • People-to-people ties: Buddhism is one of the strongest pillars connecting the two nations and civilizations from the ancient times. India during the Virtual Bilateral Summit 2020 announced a USD 15 million grant assistance for protection and promotion of Buddhist ties between India and Sri Lanka.
    • To further strengthen people-to-people ties, the first ever pilgrimage to Bodh Gaya for Sri Lankan Armed Forces personnel and their families was organized in 2018.
    • Cultural exchanges are being promoted through India-Sri Lanka Foundation and Swami Vivekananda Cultural Centre (SVCC). SVCC actively promotes awareness of Indian culture.
  • Tourism: India formally launched the e-Tourist Visa (eTV) scheme for Sri Lankan tourists in 2015. In 2019, out of the total 1.91 million tourists, 355,000 tourists arrived from India.
  • Human resource development: India now offers about 710 scholarship slots annually to Sri Lankan students. Indian institutes under ‘Study in India’ Program provide technical expertise across a diverse range of courses, and include programs in niche disciplines such as Ayurveda, Yoga, and Buddhist Studies.
  • Defence and Security Cooperation: Both sides conduct joint Military exercise ('Mitra Shakti') and Naval exercise (SLINEX). India also provides defence equipment and training to Sri Lankan forces.
  • Fishermen issue: Given the proximity of the territorial waters of both countries, especially in the Palk Straits and the Gulf of Mannar, incidents of straying of fishermen are common. India and Sri Lanka have agreed to set up a Joint Working Group (JWG) on Fisheries as the mechanism to help find a permanent solution to the fishermen issue.
  • Indian Community: The People of Indian Origin (PIOs) in Sri Lanka comprise Sindhis, Borahs, Gujaratis, Memons, Parsis, Malayalis and Telugu speaking persons. Though their numbers (10,000 approximately) are lesser compared to Indian Origin Tamils (IOTs), they are economically prosperous and are well placed. According to 2011 census, population of IOTs is about 1.6 million.

India-Sri Lanka: Convergence and Conflicts

The two states have had fractious relations for three chief reasons.

  • The foremost being the implementation of the long-pending Thirteenth Amendment that sought to introduce provincialism to provide political representation to the Tamil community.
  • The second one pertains to Sri Lanka’s growing dependence on China and its sell-out of geostrategically important ports Colombo and Hambantota — both of which have caused distress in New Delhi.
  • The final is the corollary of the second concern, which is the rejection of New Delhi as an important partner. Killing of Indian fishermen by the Sri Lankan Navy, as well as the cancellation of the East Container Terminal port contract to India are lingering issues that have added to these concerns.

Strategic Issue of China factor and Debt Trap leading to current economic crisis in Sri Lanka

  • Over the period, China has converted its economic power into political concessions having strategic value. China has Hambantota port and Colombo Port City on 99-year lease. India and Japan are out of the East Container Terminal project. China is investing in infrastructure projects which have strategic value and therefore its hold over the country is far more than what the economic statistics reveal. Moreover, its policy of exploiting opportunities is really remarkable. It bailed out Sri Lanka from a severe forex problem at the end of 2021.
  • In addition, the current Sri Lankan government are known to be closer to China than India and these developments have made India and her allies worried about China’s growing clout in the Indo-Pacific China, for instance, is set to commence the construction of a US $13 billion city on Sri Lanka’s seafront close to Colombo.
  • China is also pushing Sri Lanka to immediately conclude the China-Sri Lanka free trade agreement (FTA), which the Chinese claim will benefit Colombo’s local market and products.
  • Yet, this economic interaction with China has not been without ramifications for Colombo. Sri Lanka has been forced into a debt trap, and has had to sell its strategic assets though debt-equity swaps leading to creation of zones where its own sovereignty has been negated.

The latest developments in India- Sri Lanka Ties

Beginning January 2022, India has been providing crucial economic support to the island nation in the grip of a severe dollar crisis that, many fear, might lead to a sovereign default, and a severe shortage of essentials in the import-reliant country. India has lent over $2.5 billion in credit so far, in addition to $500 million for a shipment of diesel. It is also appointing experts to assist Sri Lanka’s economic recovery, and for various joint projects.


Conclusion: Cooperation across sectors does not diminish concerns on issues where the two neighbours might not align: Tamil minority rights and China’s importance in Sri Lanka’s economy. However, history, cultural closeness and the constraints of geography poise India and Sri Lanka as natural and permanent partners to tide over these issues and explore synergies in new avenues to further their respective economic and developmental aspirations jointly.


Question: Despite the convergence of objectives and interests, there is an urgent need for India and Sri Lanka to reinvigorate their bilateral relationship carefully and deliberately. Examine.



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