India continues to share partnership with Sri Lanka

India and Sri Lanka enjoy a vibrant and growing economic and commercial partnership, which has witnessed considerable expansion over the years. India has traditionally been among Sri Lanka’s largest trade partners and Sri Lanka remains among the largest trade partners of India in the SAARC. In 2020, India was Sri Lanka’s 2nd largest trading partner with the bilateral merchandise trade amounting to about USD $ 3.6 billion. 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. A number of leading companies from India have invested and established their presence in Sri Lanka. Apart from the growth in trade and investment, India has been the largest source market of tourists visiting Sri Lanka.

In this context, it is fitting to appreciate India’s stand to support Sri Lanka financially to recover the economic crisis that Sri Lanka is currently in. Also, India stood by Sri Lanka when there was a tremendous pressure from third parties to call off the Independence celebrations in the light of economic challenges. Thus, Sri Lanka is looking forward to further strengthening the bilateral relationships with India.

Essentially, India was Sri Lanka's first creditor nation to support its debt restructuring which will soon pave the way for an IMF bailout. The country requires the support of all its major creditors, including China to get IMF support.

Earlier, External Affairs Minister S Jaishankar who was in Colombo declared that India has decided to ‘not to wait on others but to do what we believe is right’ in India’s Sri Lanka relations.

After bilateral talks, Jaishankar addressed a joint press conference at the Presidential Secretariat along with President Ranil Wickremesinghe and Foreign Affairs Minister Ali Sabry. He said in Colombo that India will stand by Sri Lanka in its hour of need and expressed confidence in overcoming challenges. His words that India “felt strongly that Sri Lanka’s creditors must take proactive steps to facilitate its recovery” and extended financial assurances to the IMF to clear the way for Sri Lanka to move forward. Our expectation is that this will not only strengthen Sri Lanka’s position but ensure that all bilateral creditors are dealt with equally,” must be heart-warming to the beleaguered President.

He also said India will encourage greater investments in the Sri Lankan economy, especially in the core areas like energy, tourism and infrastructure. Apart from the use of rupee settlement for trade, he also suggested strengthening connectivity, encouraging Indian tourists to make RuPay payments and the use of UPI payment as helpful to Sri Lanka.

Meanwhile, Sri Lanka's High Commissioner to India Milinda Moragoda has lauded New Delhi's support to Sri Lanka which came without "condition" and the package was "extremely flexible". 

Speaking to diplomatic correspondent Sidhant Sibal, High Commissioner Moragoda said, "India helped us to stabilise the economy, India reached out to the IMF and some of the bilateral partners like Japan."

In contrast to China, India – the third largest creditor – validated its “neighbourhood first policy” by writing to the IMF Chief of its support to restructuring of Sri Lanka’s debts on the eve of EAM Jaishankar’s visit to Colombo. In its letter to IMF, India has said it will support medium to long term treatment of debts through maturity extension and interest rate reduction or any other financial operations that would deliver similar relief. India also said that it expects Sri Lanka to seek equitable debt treatments from all commercial creditors and other official bilateral creditors.

On China extending its support for debt restructuring, Moragoda said, "China has given a letter but it is at the moment not sufficient to meet the requirements of what the IMF is expecting. So this discussion is still ongoing."

The high commissioner pointed to high-level visits between the two sides, including by Sri Lankan Petroleum to India and the annual defence dialogue later this month. On the visit of the Chinese spy ship Yuan Wang 5, the envoy explained that "the lesson we have learnt is that we have to ensure that there is constant communication, unambiguous and frank communication"

He also spoke on Indian conglomerate Adani Group's investment in the western container terminal, cultural connect and implementation of the 13th amendment."

Speaking about Sri Lanka's current economic situation, envoy Moragoda pointed out that the reasons are multifaceted including Covid pandemic, the Ukraine war and a situation where Colombo was not able to pay its debt.

"We had over-borrowed, and we had not worked out enough ways to pay back. India stepped in very quickly," he said adding that it was "extremely flexible" because had the country gone to any other institution like IMF at that time they would have wanted it to go through a whole process. "India instead, basically backed through different instruments," the envoy said praising aid received from India.

On sprucing up the flow of tourists from India, the High Commissioner said that Sri Lanka's tourism ministry is actually working on it as India is the main market. "We are also looking at increasing connectivity and have been speaking in the leaders in the aviation sector here, to see what will it take for more Indian airlines to fly to Sri Lanka, what are the obstacles," he said.

High Commissioner also spoke on the defence partnership between the two nations. "On maritime surveillance and Dornier, we already have one and discussions about a second because that was part of the arrangement we agreed on."

Meanwhile, India’s State Minister of External Affairs V. Muraleedharan who was in Colombo to attend the 75th Independence Day celebrations met President Ranil Wickremesinghe where the two sides have discussed the implementation of the 13th Amendment to the Constitution.

The Indian State Minister appreciated the measures taken by the Sri Lankan government to ensure ethnic harmony.

He also conveyed greetings of Indian Prime Minister Narendra Modi for the 75th Independence Day of Sri Lanka.