India makes inroads into Sri Lanka under China's long shadow | The Business Standard
Skip to main content
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • Subscribe
    • Epaper
    • GOVT. Ad
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
The Business Standard

Thursday
July 10, 2025

Sign In
Subscribe
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • Subscribe
    • Epaper
    • GOVT. Ad
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
THURSDAY, JULY 10, 2025
India makes inroads into Sri Lanka under China's long shadow

South Asia

Reuters
28 December, 2022, 10:20 am
Last modified: 28 December, 2022, 10:22 am

Related News

  • Bangladesh opt to bat first to level series against Sri Lanka
  • Dhaka wants to strengthen economic cooperation with Colombo
  • Sri Lanka keen to strengthen relations with Bangladesh's private sector
  • Sri Lanka seeks Bangladesh investment for pharma industry development
  • Sri Lanka train kills elephant despite new safety moves

India makes inroads into Sri Lanka under China's long shadow

Reuters
28 December, 2022, 10:20 am
Last modified: 28 December, 2022, 10:22 am
FILE PHOTO: Drivers push auto rickshaws in a line to buy petrol from a fuel station amid Sri Lanka's economic crisis, in Colombo, Sri Lanka, July 29, 2022. REUTERS/Kim Kyung-Hoon/File Photo
FILE PHOTO: Drivers push auto rickshaws in a line to buy petrol from a fuel station amid Sri Lanka's economic crisis, in Colombo, Sri Lanka, July 29, 2022. REUTERS/Kim Kyung-Hoon/File Photo

When Sri Lanka slid into its worst economic crisis in seven decades leading to deadly riots and alarming shortages of fuel, food and medicines earlier this year, its giant northern neighbour stepped into the breach.

India provided about $4 billion in rapid assistance between January and July, including credit lines, a currency swap arrangement and deferred import payments, and sent a warship carrying essential drugs for the island's 22 million people.

Now, as Sri Lanka closes in on a $2.9 billion loan deal from the International Monetary Fund (IMF) and its economy stabilises, India is seeking to land ambitious long-term investments, with an eye on countering the influence of regional rival China, a government minister and three sources said.

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

"What we are looking at right now is investment from them," Sri Lankan Foreign Minister Ali Sabry said in an interview this month, referring to a range of projects worth over $1 billion currently under discussion that would help bolster India's presence in Sri Lanka. "They're willing to invest as much as it takes."

"India is probably strategically looking at that...because of their security concerns," Sabry said.

India's foreign ministry did not respond to questions from Reuters on its plans and strategic aims in Sri Lanka.

Regional security would always be a focus for New Delhi, a source with knowledge of the matter told Reuters, at a time of persistent friction with China along their Himalayan frontier.

"There are no two ways about security concerns," the source said, asking not to be named because of the sensitivity of the issue. "In terms of long-term engagement, it is investment that is being focused on."

Besides seeking Indian investments to set up renewable energy and power projects in the north of the island, Sri Lanka is also keen to work with New Delhi on expanding and developing the harbour at Trincomalee in the northeast into a major port, several officials said.

Taking advantage of northern Sri Lanka's proximity to India, these projects could help New Delhi balance China's extensive infrastructure projects in the south of the island that have been built up over the last 15 years.

Sri Lanka's Tamil-dominated north also shares ethnic ties with southern India's Tamil Nadu state.

CONCERN ABOUT CHINA

The talks, and the scale of Indian aid this year that far exceeds other donors, underline New Delhi's efforts to claw back influence in the island located just a few miles off its southern tip along busy waterways linking Asia to Europe.

In late June, a fortnight before tens of thousands of angry Sri Lankans took to the streets and forced President Gotabaya Rajapaksa to flee the country, India's top diplomat flew into the island nation's main city of Colombo for meetings.

Foreign Secretary Vinay Kwatra, who was accompanied by officials from India's finance ministry, met Rajapaksa and Prime Minister Ranil Wickremesinghe, among others.

In their conversations with the Sri Lankan leadership, Kwatra and other Indian officials flagged China's position as a key geopolitical concern, according to a Sri Lankan government source with direct knowledge of the discussions.

The source, who declined to be named because he was not authorised to speak to the press, said China's huge role in the island's economy, which had mushroomed under previous Rajapaksa administrations, was troubling India more than anything else.

Details of the June meeting have not previously been reported.

Kwatra and the Indian and Sri Lankan foreign ministries did not respond to questions from Reuters on the June meetings.

In a statement released immediately after Kwatra's visit, the Indian foreign ministry said that talks had mainly focused on economic issues, including deepening investments. It made no mention of China.

New Delhi has long been concerned about China's clout in its neighbourhood, including Nepal, Bangladesh and Sri Lanka. Sensitivities have been heightened, and diplomatic relations frayed, since Indian and Chinese troops clashed along a remote Himalayan border in 2020, leaving dozens of soldiers dead.

"We understand that it is their prerogative to look after their security," Sabry said, referring to India. "And as far as Sri Lanka is concerned, we don't want to contribute to any escalation of tension between any countries."

China, meanwhile, has engaged with the Sri Lankan government on debt restructuring that is required for the IMF deal to go through, besides sending shipments of medicine, fuel and rice.

The World Bank estimates Beijing's lending stands at around $7 billion, or 12% of Sri Lanka's $63 billion external debt.

"We are willing to work with relevant countries and international financial institutions to continue to play a positive role in helping Sri Lanka," China's foreign ministry said in response to written questions from Reuters.

The ministry said it did not have details of India's assistance and investment in Sri Lanka and that its own support of Sri Lanka was "not targeted at third parties".

PERFECT STORM

Sri Lanka sank into a financial crisis after the COVID-19 pandemic decimated tourism and remittances from citizens working abroad fell. The war in Ukraine pushed prices for imports, particularly fuel, sharply higher.

Rajapaksa's administration also resisted help from the IMF, meaning foreign exchange reserves dwindled, worsening fuel and medicine shortages.

Violent protests broke out as tens of thousands of people took to the streets and stormed government buildings.

The president fled the country in July, and resigned. By then, Sri Lanka finally engaged with the IMF and the two sides have since struck a preliminary $2.9 billion loan deal.

But it was Indian assistance that helped Sri Lanka buy time.

"Without India, Sri Lanka would have unravelled as Lebanon did," said Uditha Devapriya, chief international relations analyst at Factum, a Colombo-based foreign policy think-tank.

"Sri Lanka has clearly benefited from being the closest neighbour to the most powerful country in the region. It is also in India's interest to ensure stability in its backyard."

In October, Wickremesinghe - who took over as president in July after Rajapaksa quit - unveiled a blueprint for Trincomalee, which has a natural deep-water harbour, including a proposal to work with India to develop a strategic port there besides setting-up a new industrial zone and an energy hub, according to details released by his office.

India and Sri Lanka are also in preliminary discussions on an undersea cable to connect the power grids of both countries and a fuel pipeline from southern India's mainland to northern Sri Lanka - projects that could together cost at least $4 billion, according to officials on both sides.

In the energy sector, India's state-run NTPC is working on a 100-megawatt solar power plant in Sampur in Trincomalee district after the two countries signed an agreement in March.

In the northwest of Sri Lanka, India's Adani Group is awaiting regulatory approvals for two wind power projects worth $500m in Mannar region, Sri Lanka's Power Minister Kanchana Wijesekera said in August.

Off the northwestern coast, ONGC Videsh Limited (OVL), the overseas arm of Delhi's state-run Oil and Natural Gas Corporation, has set its sights on exploration licences, and has had multiple discussions with Sri Lankan authorities who are finalising regulations ahead of inviting bids from global companies, two Sri Lanka energy ministry officials said.

Both asked not to be named because discussions were ongoing.

Adani, NTPC and OVL did not respond to questions from Reuters on their projects in Sri Lanka.

The push for oil and gas exploration was part of the discussions in June, the source with knowledge of the talks said.

YUAN WANG 5

Foreign Minister Sabry said the Sri Lankan government was keen on capitalising on India's growing economic prowess, particularly through renewable energy and infrastructure projects, while maintaining key relationships with other major allies, including China and Japan.

Despite India's recent goodwill in Sri Lanka, New Delhi remains wary of China's presence.

In July and August, the regional rivals became embroiled in a diplomatic spat over a Chinese military survey ship, Yuan Wang 5, that stopped at southern Sri Lanka's Hambantota port.

At that time, Indian Foreign Ministry Spokesman Arindam Bagchi said that although India had given "unprecedented" support to Sri Lanka during the economic crisis, New Delhi would not back down from its security needs.

Despite India's crucial help during the financial crisis this year, Sri Lanka still needs China - one of its biggest creditors - to agree to a debt restructuring plan, along with India and Japan, to clinch the IMF loan deal, Sri Lankan officials said.   

"Chinese investment is very important, Chinese relationship is very important," Sabry said.

"So I don't think even India or anybody expects Sri Lanka not to work with China. To be fair by them, none of them have asked us."

Top News / World+Biz

Sri Lanka / India-Sri Lanka / China-Sri Lanka

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • No final consensus yet on CJ appointment from senior-most judges: Salahuddin
    No final consensus yet on CJ appointment from senior-most judges: Salahuddin
  • National Consensus Commission chief Ali Riaz speaks at the Foreign Service Academy in the capital’s Bailey Road on 10 July 2025. Photo: Collected
    Chief justice appointment: Consensus reached on two key issues, says Ali Riaz
  • In terms of stream of education, girls maintained their excellence as well. Photo: TBS
    Lowest SSC pass rate in 17 years as over 6 lakh students fail

MOST VIEWED

  • Graphics: TBS
    BB raises startup fund limit, drops upper age barrier
  • Workers pack undergarments at the packing section of a garment factory in Ashulia, on the outskirts of Dhaka, Bangladesh, April 19, 2025. Photo: REUTERS/Fatima Tuj Johora
    After US tariffs, jobs hang by a thread in Bangladesh's garments sector
  • Global Islami Bank rectifies 2023 figures, reports Tk2,259cr loss instead of Tk128cr profit
    Global Islami Bank rectifies 2023 figures, reports Tk2,259cr loss instead of Tk128cr profit
  • Bangladesh Bank Governor Ahsan H Mansur. TBS Sketch
    Audit reports of most banks contain cooked up data: BB governor
  • File photo of containers at Chattogram port/TBS
    US buyers push Bangladeshi exporters to share extra tariff costs
  • CA orders law enforcers to complete all election preparations by December
    CA orders law enforcers to complete all election preparations by December

Related News

  • Bangladesh opt to bat first to level series against Sri Lanka
  • Dhaka wants to strengthen economic cooperation with Colombo
  • Sri Lanka keen to strengthen relations with Bangladesh's private sector
  • Sri Lanka seeks Bangladesh investment for pharma industry development
  • Sri Lanka train kills elephant despite new safety moves

Features

Illustration: TBS

Behind closed doors: Why women in Bangladesh stay in abusive marriages

3h | Panorama
Purbachl’s 144-acre Sal forest is an essential part of the area’s biodiversity. Within it, 128 species of plants and 74 species of animals — many of them endangered- have been identified. Photo: Syed Zakir Hossain/TBS

A forest saved: Inside the restoration of Purbachal's last Sal grove

3h | Panorama
Women are forced to fish in saline waters every day, risking their health to provide for their families. Photo: TBS

How Mongla’s women are bearing the brunt of rising salinity

1d | Panorama
Dr Mostafa Abid Khan. Sketch: TBS

Actual impact will depend on how US retailers respond: Mostafa Abid Khan

2d | Economy

More Videos from TBS

July-August mass uprising: Rakib explains Chatradal's role in Jatrabari

July-August mass uprising: Rakib explains Chatradal's role in Jatrabari

27m | TBS Stories
News of The Day, 10 JULY 2025

News of The Day, 10 JULY 2025

1h | TBS News of the day
SSC and equivalent results released: Pass rate 68.45%, GPA drops by 5

SSC and equivalent results released: Pass rate 68.45%, GPA drops by 5

1h | TBS Today
Islami bank aims to increase deposits to Tk 2 lakh crore by 2025

Islami bank aims to increase deposits to Tk 2 lakh crore by 2025

4h | TBS Programs
EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Advertisement
  • Privacy Policy
  • Comment Policy
Copyright © 2025
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net