Prosperity through connectivity: ‘Positive transformation’ in India-Sri Lanka ties 

The recent New Delhi visit of Sri Lankan President Ranil Wickremesinghe will be remembered for its bilateral agreements that aimed at fortifying the nation’s economy against the kind of unprecedented economic shocks of last year. There are multiple projects that are on the anvil aimed at ‘Promoting Connectivity, Catalysing Prosperity’ through the ‘India-Sri Lanka Partnership Vision’, as the joint statement issued at the end of the visit was aptly titled. Together, they promise sector-specific solutions in energy, fuel, and forex, apart from promoting neighbourhood tourism, through the short, medium, and long terms, under India’s ‘Neighbourhood First’ policy, propagated by Prime Minister Narendra Modi.

Sri Lankan presidents, prime ministers, and foreign ministers had made New Delhi their first overseas destination, within days or weeks after taking charge, if only to underscore and build upon the depth of bilateral relations.

It was Wickremesinghe’s maiden India visit after taking over as President under the most chaotic period of the nation. In the past, Sri Lankan presidents, prime ministers, and foreign ministers had made New Delhi their first overseas destination, within days or weeks after taking charge, if only to underscore and build upon the depth of bilateral relations. Nevertheless, when Wickremsinghe met PM Modi on 21 July 2023, it was the first anniversary of Wickremesinghe’s presidency, which was marked by hope against national desperation that was seen a year back.

Nostalgic scheme

Among the bilateral agreements signed during the visit, President Wickremesinghe should have felt nostalgic about the land bridge between the two countries, As Prime Minister under the co-habitation Government of President Chandrika Bandaranaike-Kumaratunga, he had mooted the idea of a land bridge at a seminar in Chennai in 2003 Later, he took it up in talks with his then Indian counterpart, Atal Behari Vajpayee, and the land bridge found a mention in the joint statement in 2003. However, Tamil Nadu Chief Minister Jayalalithaa shot it down when the Centre asked the state government to undertake a feasibility study, calling it a ‘threat to national security’. She may have had a point at the time, given the unpredictability of the terror-outfit LTTE, especially after peace talks with the Sri Lankan Government had come to a ‘grinding halt’. This time too, a feasibility study on a land bridge made it to the joint statement, but with better prospects of a follow-up. It is, however, only one of the many connectivity-centric decisions between the two countries, including maritime connectivity, fuel connectivity, and fintech connectivity—all of them as a part of India’s ‘Neighbourhood First’ policy and ‘SAGAR’ Vision, as PM Modi said in their joint news conference.

Tamil Nadu Chief Minister Jayalalithaa shot it down when the Centre asked the state government to undertake a feasibility study, calling it a ‘threat to national security’.

Together, the idea was to promote ‘civilisational ties, geographical proximity, cultural connect, and age-old goodwill between the peoples of the two countries.’ All of them have been discussed by the two countries and debated in Sri Lanka, especially, as there are no two opinions in India about helping out neighbours to reach their full potential early on.

Maritime, air connectivity

The landbridge may include a railway line, to make it even more attractive and feasible for the large number of tourists and pilgrims who travel either way, apart from promoting regional and sub-regional trade. PM Modi mentioned reviving maritime connectivity between the two nations that did not require huge outlays and long timeframes. The overall vision of the maritime connectivity projects is to ‘cooperate in development of ports and logistics infrastructure at Colombo, Trincomalee and Kankesanthurai (KKT) with an aim to consolidate regional logistics and shipping, as per mutual understanding’, the joint statement explained. At the top of the list of maritime connectivity projects is the Kankesanthurai-Nagapattinam ferry service, which is expected to commence in the next few months. The joint statement also promised to ‘work towards the resumption of ferry services between Rameswaram and Talaimannar’, whose port infrastructure was destroyed by a cyclone in the early ’60s. The annual cyclones in the shared seas under the influence of the north-east monsoon needed studying. Later, the ethnic war in the island-nation, with the ‘Sea Tigers’ dominating the Sri Lankan waters, contributed to the delay.

The overall vision of the maritime connectivity projects is to ‘cooperate in development of ports and logistics infrastructure at Colombo, Trincomalee and Kankesanthurai (KKT) with an aim to consolidate regional logistics and shipping, as per mutual understanding’, the joint statement explained.

Likewise, on air connectivity, the two sides observed how the ‘resumption of flights between Jaffna and Chennai has enhanced people-to-people ties,’ and agreed to ‘further expand it to Colombo as well as explore connectivity between Chennai and Trincomalee, Batticaloa, and other destinations in Sri Lanka’. India also committed to ‘encourage and strengthen investment and cooperation in civil aviation, including augmentation of airport infrastructure at Palaly (in the Tamil-majority Northern Province) for greater economic benefits to the people.’

Petroleum storage and pipeline

The highlight of the visit possibly was the joint decision to ‘carry out feasibility studies on establishing a petroleum pipeline,’ as PM Modi put it during the news conference. The joint statement dealt at length with projects that guaranteed fuel-sufficiency and energy security for Sri Lanka, with Sri Lanka learning the hard way what a fuel and energy crisis can do to the nation’s economy during last year’s dollar crisis. The two sides had agreed on the joint re-development of the oil tank-farms under the predecessor Gotabaya Rajapaksa regime, with then Foreign Secretary Harsh Vardhan Shringla having inspected the site during a four-day Sri Lanka visit in October 2021. As such, the joint statement committed the two sides to establishing a ‘high- capacity power grid inter-connection... to enable bi-directional electricity trade between Sri Lanka and ... the BBIN countries’, with the hope of cutting down on electricity costs and improving forex earnings for Sri Lanka.In the process, the two sides agreed to speed up Indian public sector NTPC’s Sampur solar power project (in eastern Trincomalee district, originally conceived as a thermal unit) and LNG infrastructure, apart from building on the ‘ongoing cooperation in development of Trincomalee Tank Farms’ and ‘cooperat for construction of a multi-product petroleum pipeline ... to ensure affordable and reliable supply of energy resources to Sri Lanka’. Through the joint statement, the two nations also committed to ‘undertaking joint exploration of hydro-carbons in Sri Lanka’s off-shore basins’—a work that Colombo had well begun but left half done over the past decades.

The joint statement dealt at length with projects that guaranteed fuel-sufficiency and energy security for Sri Lanka, with Sri Lanka learning the hard way what a fuel and energy crisis can do to the nation’s economy during last year’s dollar crisis.

Indications are that the two sides would commence technical talks on the multi-product pipelines projects early on. After Nepal (2019) and Bangladesh (2023), Sri Lanka is the third neighbourhood nation with which India is building ‘energy connectivity’, both in petroleum products and power grids. As an Indian official outlined in December 2022, ‘India today has a very robust power grid running from North to South and East to West of the country. In the future, we would like to see the grid connected to neighbouring countries including Myanmar, Sri Lanka, and then expand that connection to South-East Asian countries, to emerge as a unified market.’

Facilitating investments

Alongside it all, the two sides plan to ‘facilitate investments from India in the divestment of State-owned enterprises and in manufacturing/economic zones in various sectors in Sri Lanka’. It also noted how the decision to ‘designate INR as currency for trade settlements between the two countries has forged stronger and mutually-beneficial commercial linkage’ and agreed to ‘operationalise UPI-based digital payments for further enhancing trade and transactions between businesses and common people’. The two sides promised to promote bilateral tourism and expand on the existing schemes, both by way of furthering people-to-people contacts even more and also by helping Sri Lanka improve domestic and  family economies. On Wickremesinghe’s return home, his government lost no time in notifying the Indian rupee as ‘designated currency’. India is a major source of imports for Sri Lanka and the measure would help in reducing the outflow of the American dollar in bilateral relations. The Central Bank of Sri Lanka (CBSL) has since clarified that the Indian rupee is not ‘legal tender’ in the country. Earlier, a political adversary had claimed that making the Indian currency a legal tender would lead to Sri Lanka becoming one more state in India.

The two sides promised to promote bilateral tourism and expand on the existing schemes, both by way of furthering people-to-people contacts even more and also by helping Sri Lanka improve domestic and  family economies.

Significantly, the joint statement made only a passing reference to ‘undertake discussions on Economic and Technology Cooperation Agreement’ (ETCA), proposed by Wickremesinghe as Prime Minister (2015-19), in the place of the ‘Comprehensive Economic Partnership Agreement’ (CEPA). The latter too had failed on the anvil owing to Sri Lankan intransigence under the first Mahinda Rajapaksa presidency (2005-10). The CEPA itself was aimed at upgrading the 1999 Free Trade Agreement (FTA) between the two countries, which was also the first of its kind for India.

Fulfilling aspirations

The joint statement was also silent on two ticklish problems pertaining to Indian concerns, namely, the bilateral fishermen’s dispute and the ethnic issue in Sri Lanka. PM Modi dealt with the ethnic issue comprehensively at the joint news conference: We hope that the Government of Sri Lanka will fulfil the aspirations of the Tamils... will drive the process of rebuilding for equality, justice and peace; will fulfil its commitment to implement the 13^th Amendment and conduct the Provincial Council Elections. And will ensure a life of respect and dignity for the Tamil community of Sri Lanka.’ 

Indications are that President Wickremesinghe, as has been his wont on all major policy issues, would seek parliamentary approval for the multiple agreements signed with India, if only to ensure transparency and continuity.

Reiterating the Colombo Government’s position on the subject, Sri Lankan High Commissioner Milinda Moragoda said in a post-visit interview that a resolution of the ethnic issue (too) would have to be found ‘within Sri Lanka’. Taking the spirit of the New Delhi understanding forward, President Wickremesinghe too called an all-party meeting on the ethnic issue, with particular reference to the implementation of the India-facilitated 13^th Amendment on power devolution. As anticipated, the meeting ended in a deadlock, and further sessions are expected within a month. Indications are that President Wickremesinghe, as has been his wont on all major policy issues, would seek parliamentary approval for the multiple agreements signed with India, if only to ensure transparency and continuity. As the High Commissioner put it, ‘Sri Lanka’s hopes of benefiting from India’s economic growth and coming out of its current economic crisis hinged on being able to build causeways, bridges, pipelines, electricity transmission lines and landing infrastructure so as to increase travel to and from India’. Both countries hope for, as India’s Foreign Secretary Vinajy Kwatra described, a ‘positive transformation’ in bilateral ties after discussions with President Wickremesinghe in Colombo, ahead of the latter’s Delhi visit.

---

N. Sathiya Moorthy is a Chennai-based policy analyst and political commentator

• Neighbourhood
• Maritime Security
• India
• Neighbourhood
• Sri Lanka
• Air Connectivity
• bilateral agreements
• Economy
• India-Sri Lanka relations
• maritime
• Narendra Modi
• petroleum pipeline
• Tourism

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.

PREV NEXT