India-Sri Lanka Relations: A Renewed Strategic Partnership

President Dissanayake’s visit has not only reinforced the growing India-Sri Lanka partnership but also signaled India’s determination to shape the regional order by countering China's influence.

India-Sri Lanka Relations: President Anura Kumara Dissanayake’s State Visit

Sri Lankan President Anura Kumara Dissanayake embarked on his maiden state visit to India from December 15-17, 2024, marking a significant milestone in bilateral relations between the two close neighbors. Fresh off his unexpected yet decisive electoral victory on September 23, 2024, the visit underscores his government’s commitment to resetting regional ties and fostering deeper cooperation with India. Coming at a time of evolving geopolitical dynamics and shared economic challenges, the visit provides an opportunity for both nations to strengthen their economic, infrastructural, and strategic partnerships while jointly addressing emerging regional concerns.

During his stay, President Dissanayake engaged in high-level discussions with Indian leadership, including Prime Minister Narendra Modi, President Droupadi Murmu (Rashtrapati Ji), External Affairs Minister S. Jaishankar, and National Security Adviser Ajit Doval. These meetings reflected the growing mutual trust and recognition of shared interests in securing regional peace and prosperity.

Highlights of the Visit

The visit culminated in the release of a comprehensive joint statement, "Fostering Partnerships for a Shared Future," which outlined several key areas of collaboration aimed at revitalizing India-Sri Lanka relations:

1. Economic Cooperation: Both sides reaffirmed their commitment to advancing trade partnerships under the India-Sri Lanka Free Trade Agreement (ISFTA). Discussions also included exploring the long-pending Economic and Technological Cooperation Agreement (ETCA) to open new avenues for investment and trade, driving growth in both economies.

2. Currency Cooperation: Recognizing the need for financial stability, both nations agreed to enhance INR-LKR trade settlements to facilitate smoother cross-border trade and reduce dependency on third-party currencies.

3. Development Assistance: India’s vital role in aiding Sri Lanka’s economic recovery was acknowledged, with India having extended over $4 billion in credit lines and grants during Sri Lanka’s recent financial crisis. This support has been instrumental in stabilizing essential services and rebuilding economic confidence.

4. Defence and Security: A significant outcome of the discussions was the intent to advance defence collaboration. Both sides explored the possibility of concluding a framework agreement on defence cooperation, which would include capacity-building, joint exercises, and technology sharing.

5. Maritime Security: India reiterated its steadfast commitment to bolstering Sri Lanka’s maritime security. Recognizing the Indian Ocean as a critical conduit for trade and security, both nations agreed to deepen cooperation to counter illicit activities, piracy, and external threats in the region.

6. Infrastructure Development: Plans to rehabilitate the Kankesanthurai Port with Indian grant assistance were discussed, reflecting India’s commitment to enhancing Sri Lanka's infrastructure, connectivity, and trade capacity.

7. Regional Connectivity: Leaders welcomed the successful resumption of the Nagapattinam-Kankesanthurai ferry service and expressed optimism about progressing the Rameshwaram-Talaimannar route. Improved connectivity is set to boost trade, tourism, and cultural exchanges between the two nations.

8. Energy Cooperation: In a forward-looking step, India announced plans to establish electricity grid connectivity and develop a multi-product petroleum pipeline between India and Sri Lanka. These initiatives will enhance energy security, reduce costs, and create a sustainable energy framework for both countries.

Strategic Implications in the Indo-Pacific

The timing of President Dissanayake’s visit is particularly significant given China’s expanding footprint in the Indian Ocean Region (IOR). By prioritizing India as his first overseas destination, Dissanayake signaled Sri Lanka’s intent to recalibrate its strategic alignment.

1. Economic Recovery and Debt Realignment: India’s support in debt restructuring and development assistance offers Sri Lanka a sustainable alternative to China’s debt-driven investments, fostering greater economic independence.

2. Maritime Strategy: The renewed focus on maritime cooperation counters growing Chinese influence in the region. India’s involvement ensures a robust security framework, particularly as Sri Lanka plays a critical role in securing key shipping routes.

3. Regional Stability: Sri Lanka’s assurance that its territory will not be used for activities detrimental to India’s interests reinforces mutual trust. This commitment is vital for ensuring stability in the IOR, where geopolitical competition has intensified.

4. Balanced Foreign Policy: While Sri Lanka maintains its ties with China, the visit highlights a growing strategic tilt towards India, driven by shared economic interests and regional security concerns.

The Proposed Rail and Road Link: A Visionary Project

A major highlight of the visit was the discussion on the ambitious $5 billion road and rail link between Rameswaram in India and Trincomalee in Sri Lanka. Spanning the Palk Strait, this visionary project aims to bridge physical divides and usher in an era of unprecedented connectivity.

• Economic Benefits: By integrating markets and reducing transportation costs, the project could significantly boost bilateral trade and enhance regional economic integration.

• Strategic Importance: The link strengthens India’s role as a regional partner and counters China’s growing investments in Sri Lanka’s infrastructure sector.

• Environmental Concerns: Both countries emphasized the need for thorough environmental assessments to ensure sustainability, given the project's scale and ecological sensitivity.

While the project remains under review, its successful execution could redefine India-Sri Lanka connectivity and establish a transformative regional model for infrastructure development.

Future Path: India as a Regional Anchor

The outcomes of President Dissanayake’s visit mark a significant milestone in bilateral relations. India’s proactive foreign policy not only articulates a positive and inclusive focus on its neighbors but also acts as a bulwark against China’s expansionist tendencies in the Indian Ocean. This is particularly crucial as China intensifies its engagement with island nations like Sri Lanka and the Maldives.

India’s strategic emphasis on economic recovery, infrastructure, energy, and maritime security strengthens its position as the primary regional partner for Sri Lanka. By fostering long-term economic and strategic interdependencies, India ensures that its immediate neighborhood remains secure, stable, and aligned with its broader Indo-Pacific vision.

In essence, President Dissanayake’s visit has not only reinforced the growing India-Sri Lanka partnership¹ but also signaled India’s determination to shape the regional order by countering external influences, promoting stability, and driving shared prosperity in the Indian Ocean Region.

1. https://pib.gov.in/PressReleasePage.aspx?PRID=2084793

Prime Minister's Office

India - Sri Lanka Joint Statement: Fostering Partnerships for a Shared Future

Posted On: 16 DEC 2024 3:26PM by PIB Delhi

Prime Minister of India His Excellency Shri Narendra Modi and President of Sri Lanka His Excellency Anura Kumara Disanayaka had comprehensive and fruitful discussions at their meeting in New Delhi on 16 December 2024, during the latter’s State Visit to the Republic of India.

2. The two leaders reaffirmed that the India-Sri Lanka bilateral partnership is underpinned by deep-rooted cultural and civilizational ties, geographical proximity and the people-to-people relation.

3. President Disanayaka conveyed his deep appreciation for the unwavering support extended by India to the people of Sri Lanka during and after the unprecedented economic crisis in 2022. Recalling his profound commitment to fulfilling the aspirations of the Sri Lankan people for a prosperous future, greater opportunities, and sustained economic growth, he looked forward to India’s continued support for the achievement of these objectives. Prime Minister Modi assured President Disanayaka of India’s full commitment in this regard, in keeping with the special place Sri Lanka occupies in India’s ‘Neighbourhood First’ policy and ‘SAGAR’ vision.

4. Both leaders acknowledged that bilateral ties had deepened over the years and contributed significantly to the socio-economic development of Sri Lanka. Underscoring the potential for further cooperation, both leaders affirmed their commitment to progress the relationship between India and Sri Lanka to a mutually beneficial comprehensive partnership for the well-being of the peoples of the two countries.

Political Exchanges

5. Acknowledging the increased political interactions in the last decade and their contribution towards deepening the bilateral ties, both leaders agreed to further intensify political engagements at leadership and ministerial levels.

6. The two leaders also underscored the importance of regular parliamentary level exchanges to promote democratic values and share expertise on their institutional best practices.

Development Cooperation

7. The two leaders acknowledged the positive and impactful role of India’s development assistance to Sri Lanka that has significantly contributed to its socioeconomic growth. President Disanayaka appreciated India’s continued support for the implementation of projects despite the ongoing debt restructuring. He further acknowledged India’s decision to extend grant assistance for projects that were originally undertaken through Lines of Credit, thereby reducing the debt burden of Sri Lanka.

8. Reaffirming their commitment to work closely in further intensifying people oriented development partnership, both leaders agreed to:

i. Work together for the timely completion of ongoing projects such as Phase III & IV of Indian Housing Project, 3 (three) Islands Hybrid Renewable Energy Project and High Impact Community Development Projects across Sri Lanka;

ii. Extend full support towards timely implementation of projects for the Indian Origin Tamil community, Eastern Province, and solar electrification of religious places in Sri Lanka;

iii. Identify new projects and areas of cooperation for development partnership, in accordance with the needs and priorities of the Government of Sri Lanka.

Training and Capacity Building

9. Underlining India’s role in extending capacity building support to Sri Lanka and factoring the need for customized training and capacity building in different fields in Sri Lanka, the leaders:

i. Agreed to organise focused training of 1500 Sri Lankan civil servants across ministries and departments over a period of five years through the National Centre for Good Governance in India; and

ii. Committed to explore further training programmes for Sri Lankan officials in civil, defence and legal domains among other areas, in keeping with the requirements of Sri Lanka.

Debt Restructuring

10. President Disanayaka thanked Prime Minister Modi for India’s support in stabilizing the Sri Lankan economy through unparalleled and multi-pronged assistance including emergency financing and forex support worth USD 4 billion. He acknowledged India’s crucial assistance in Sri Lanka’s debt restructuring process, including as co-chair of the Official Creditors’ Committee (OCC), as being instrumental in finalising the debt restructuring discussions in a timely manner. He further thanked the Government of India for extending financial assistance of USD 20.66 mn to settle payments due from Sri Lanka for projects completed under existing Lines of Credit thereby significantly reducing the debt burden at a critical time.Underscoring the close and special ties with Sri Lanka, Prime Minister Modi reiterated India’s consistent support to the country in times of need and in its quest for economic recovery and stability, and prosperity for its people. The leaders instructed officials to finalize discussions on the bilateral MoU on Debt Restructuring.

11. Both leaders agreed that a strategic shift from debt-driven models towards investment led partnerships across different sectors would ensure a more sustainable path to economic recovery, development and prosperity in Sri Lanka.

Building Connectivity

12. The leaders underlined the importance of greater connectivity and acknowledged the presence of complementarities between the two economies which could be harnessed for economic development and growth of both countries. In this regard:

i. While expressing satisfaction at the resumption of the passenger ferry service between Nagapattinam and Kankesanthurai, they agreed that officials should work towards the early recommencement of the passenger ferry service between Rameshwaram and Talaimannar.

ii. Explore the possibility of jointly working on rehabilitation of Kankesanthurai port in Sri Lanka, which will be implemented with grant assistance from the Government of India.

Energy Development

13. Emphasizing the need for reliable, affordable and timely energy resources for ensuring energy security and meeting basic needs of the people, both leaders underscored the importance of strengthening cooperation in the energy sector and facilitation towards timely implementation of ongoing energy cooperation projects between India and Sri Lanka. In this regard, the leaders agreed to:

i. Take steps towards the implementation of the solar power project in Sampur and further augment its capacity as per the requirements of Sri Lanka.

ii. Continue consideration of the several proposals which are in different stages of discussion including:

(a) supply of LNG from India to Sri Lanka.

(b) establishment of a high-capacity power grid interconnection between India and Sri Lanka.

(c) cooperation amongst India, Sri Lanka and UAE to implement a multi-product pipeline from India to Sri Lanka for supply of affordable and reliable energy.

(d) joint development of offshore wind power potential in Palk Straits, while prioritizing environmental protection including fauna and flora.

14. Acknowledging the ongoing cooperation in the development of Trincomalee Tank Farms, both leaders decided to support the development of Trincomalee as a regional energy and industrial hub.

People-Centric Digitization

15. Acknowledging the successful experience of India in people-centric digitization, which has helped in improving governance, transforming service delivery, ushering transparency, and contributing to social welfare, President Disanayaka conveyed his government’s interest in exploring the establishment of similar systems in Sri Lanka with Indian assistance. Prime Minister Modi conveyed India’s readiness in fully supporting Sri Lanka’s efforts in this regard. In this context, the two leaders agreed to:

i. Expedite implementation of Sri Lanka Unique Digital Identity (SLUDI) project to aid the country in its efforts to improve delivery of government services to the public;

ii. Collaborate on avenues to fully roll out Digital Public Infrastructure (DPI) in Sri Lanka with assistance from India.

iii. Establish a Joint Working Group to explore the implementation of a DPI stack in Sri Lanka based on experience and systems already established in India, including advancing ongoing technical discussions on the implementation of DigiLocker in Sri Lanka.

iv. Promote digital financial transactions by extending the use of UPI digital payments for the benefit of both countries and in keeping with payment systems related regulatory guidelines of both countries.

v. Continue bilateral exchanges to garner learnings from India’s Aadhaar platform, GeM portal, PM Gati Shakti digital platform, digitized customs and other taxation procedures, with a view to exploring the benefits of establishing equivalent systems in Sri Lanka.

Education and Technology

16. With a view to supporting human-resource development and promoting innovation and technology in Sri Lanka, the two leaders agreed to:

i. Seek to expand collaboration in research and development in sectors such as agriculture, aquaculture, digital economy, health and other areas of mutual interest.

ii. Explore cooperation between educational institutions of both countries.

iii. Foster cooperation between Start-up India and Information Communication Technology Agency of Sri Lanka (ICTA), including for mentorship for Sri Lankan start-ups.

Trade and Investment Cooperation

17. The two leaders appreciated that the India-Sri Lanka Free Trade Agreement (ISFTA) has enhanced the trade partnership between the two countries, while acknowledging that there is immense potential for further expanding the trade ties Underscoring the pace of economic growth and opportunities in India as well as the growing market size and its potential for enhancing trade and investment for Sri Lanka, both leaders agreed that it is now opportune to further enhance the trade partnership by committing to:

i. Continue discussions on the Economic & Technological Cooperation Agreement.

ii. Enhance INR-LKR trade settlements between the two countries.

iii. Encourage investments in key sectors in Sri Lanka to enhance its export potential.

18. The two leaders agreed on the need to continue discussions for the early finalization of the proposed bilateral Social Security Agreement.

Agriculture and Animal Husbandry

19. Both leaders appreciated the ongoing collaboration for the development of the dairy sector in Sri Lanka with the aim of promoting self-sufficiency and nutritional security.

20. Noting President Disanayaka’s emphasis on agricultural modernization, the two leaders agreed to establish a Joint Working Group to examine possibilities for the comprehensive development of the agricultural sector in Sri Lanka.

Strategic & Defence Cooperation

21. Recognizing shared security interests of India and Sri Lanka, both leaders acknowledged the importance of regular dialogue based on mutual trust and transparency and giving primacy to each other’s security concerns. As natural partners, both leaders underscored the common challenges faced by the two countries in the Indian Ocean Region and reaffirmed their commitment to work together in countering traditional and non-traditional threats as well as to ensure a free, open, safe and secure Indian Ocean Region. India being Sri Lanka’s closest maritime neighbour, President Disanayaka reiterated Sri Lanka’s stated position of not permitting its territory to be used in any manner inimical to the security of India as well as towards regional stability.

22. Expressing satisfaction at the ongoing defence cooperation in training, exchange programs, ship visits, bilateral exercises and assistance to augment defence capabilities, both leaders agreed to advance maritime and security collaboration.

23. President Disanayaka thanked India for its support through the provision of a Dornier Aircraft for maritime surveillance; and establishment of the Maritime Rescue and Coordination Centre in Sri Lanka amongst other assistance vital for Sri Lanka to enhance its maritime domain awareness. He further appreciated India’s role as a ‘first responder’ for Sri Lanka in the field of Humanitarian Assistance and Disaster Relief. Importantly, the recent success in collaboration efforts of Indian and Sri Lanka Navies in the seizing of vessels trafficking a large quantity of narcotics with suspects was mentioned and President Disanayaka expressed his gratitude to the Indian Navy.

24. As a trusted and reliable partner, India conveyed its continued commitment to working closely with Sri Lanka in advancing its defence and maritime security needs and extending necessary assistance towards augmenting its capabilities to address its maritime challenges.

25. Taking cognizance of various security threats such as terrorism, drug/narcotics smuggling, money laundering, and, both leaders agreed to further strengthen the ongoing efforts in training, capacity building, and intelligence and information sharing. In this context, they agreed to:

i. Explore the possibility of concluding a framework Agreement on Defence Cooperation;

ii. Foster cooperation in hydrography;

iii. Provision of defence platforms and assets to augment Sri Lanka’s defence capabilities;

iv. Intensify collaboration through joint exercises, maritime surveillance, and defence dialogue and exchanges;

v. Extend assistance to strengthen capabilities of Sri Lanka on disaster mitigation, relief and rehabilitation, including through training, joint exercises and sharing of best practices; and

vi. Enhance capacity building and training for Sri Lankan defence forces and conduct tailormade training programmes, wherever required.

Cultural and Tourism Development

26. Underlining their cultural affinity, geographical proximity and civilizational ties, both leaders acknowledged the need to further promote cultural and tourism links between the two countries. Given that India has been the largest source of tourism for Sri Lanka, the two leaders committed to:

i. Enhancing air connectivity to various destinations in India and Sri Lanka, while noting the successful resumption of flights between Chennai and Jaffna.

ii. Continuing discussions on the development of airports in Sri Lanka.

iii. Promoting Indian investments for the development of tourism infrastructure in Sri Lanka.

iv. Establishing a facilitatory framework for development of religious and cultural tourism.

v. Promoting academic linkages between educational institutions for the promotion and advancement of cultural and linguistic ties between the two countries.

Fisheries Issues

27. Acknowledging the issues faced by fishermen on both sides and factoring the livelihood concerns, the leaders agreed on the need to continue to address these in a humanitarian manner. In this regard, they also underscored the need to take measures to avoid any aggressive behaviour or violence. They welcomed the recent conclusion of the 6th Joint Working Group Meeting on Fisheries in Colombo. The leaders expressed confidence that through dialogue and constructive engagements a long lasting and mutually acceptable solution could be achieved. Given the special relationship between India and Sri Lanka, they instructed officials to continue their engagement to address these issues.

28. President Disanayaka thanked India for its initiatives for the sustainable and commercial development of fisheries in Sri Lanka, including development of Point Pedro Fishing Harbour, rehabilitation of Karainagar Boatyard and cooperation in Aquaculture through Indian assistance.

Regional and Multilateral Cooperation

29. Recognizing shared maritime security interests in the Indian Ocean Region, both leaders agreed to jointly pursue strengthening regional maritime security, both bilaterally and through existing regional frameworks. In this regard, the leaders welcomed the recent signing of the Founding Documents of the Colombo Security Conclave headquartered in Colombo. India reiterated its support to Sri Lanka in advancing the objectives of the Conclave.

30. India conveyed its full support for Sri Lanka’s Chairmanship of the IORA. Both leaders underscored the need for a substantive action plan by IORA member countries for security and development of all in the region.

31. Both leaders also underlined their commitment to further strengthen and enhance regional cooperation under BIMSTEC.

32. President Disanayaka requested Prime Minister Modi’s support for Sri Lanka’s application to become a member of the BRICS.

33. Prime Minister Modi welcomed Sri Lanka’s support to India’s candidature for a non-permanent seat on the UN Security Council for 2028-2029.

Conclusion

34. The leaders noted that the effective and timely implementation of agreed measures, as outlined, would deepen the bilateral ties between the two countries and transform the relationship into a new standard for friendly and neighbourly ties. Accordingly, the leaders directed their officials to initiate necessary measures for implementation of the understandings and agreed to extend guidance, where required. They further resolved to continue engagement at leadership level to qualitatively enhance bilateral ties that are mutually beneficial, cater to sustainable developmental needs of Sri Lanka and contribute to the stability of the Indian Ocean Region. President Disanayaka invited Prime Minister Modi to pay a visit to Sri Lanka at his earliest convenience.