Indo-Lanka Ties Back on the Rails

By Sugeeswara Senadhira | Published: 2:00 AM Dec 6 2021
Columns Indo-Lanka Ties Back on the Rails

By Sugeeswara Senadhira

India acceded to Sri Lanka’s plea for a line of credit to cover the import of food and medicines and a currency swap arrangement, to deepen economic cooperation. Finance Minister Basil Rajapaksa’s visit to Delhi resulted in a satisfactory four-point package to that would be a much-welcome helping hand to Sri Lanka to overcome the current economic problems.

The package was finalised during two meetings that visiting Sri Lankan finance minister Basil Rajapaksa had with his Indian counterpart Nirmala Sitharaman and external affairs minister S Jaishankar on 1 and 2 December.

Another major concession extended to India was the energy security package that will include a line of credit to cover the import of fuel from India. This was finalised during Rajapaksa’s talks with petroleum Minister Hardeep Singh Puri.

Realising the need to keep a top level contact open, Rajapaksa and Sitharaman and Jaishankar agreed to open direct lines of communication and to be in direct and regular contact with each other to coordinate on this initiative. Indian Media quoting official sources said that it was significant that both Sitharaman and Jaishankar participated in the two rounds of discussions with Rajapaksa. They said this reflected the importance India attaches to the relationship with Sri Lanka.

The currency swap offered to Sri Lanka is expected to be made under the South Asian Association for Regional Cooperation (Saarc) facility and would be worth $400 million.

Rajapaksa’s meeting with Petroleum Minister Hardeep Singh Puri resulted in India extending a line of credit for fuel purchase. Puri, who served as First Secretary in Indian High Commission in Colombo from 1986 to 1989, helped then High Commissioner J.N. Dixit to finalise the draft for the Indo Sri Lanka Agreement of 1987, which was signed by President J.R. Jayewardene and Indian Prime Minister Rajiv Gandhi.

Defence and security cooperation

Another important meeting Basil held in New Delhi was with the National Security Adviser Ajit Doval, who holds the rank of a Cabinet Minister. They engaged in an extremely cordial conversation and discussed a range of issues pertaining to the mutual strategic interests of both countries. They expressed satisfaction over the agreement by India to extend funds for early modernisation of Trincomalee Tank Farm.

During the discussions it was stressed that India is an important economic partner and in 2020, India was Sri Lanka’s 2nd largest trading partner with the bilateral merchandise trade amounting to about $ 3.6 billion. 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. FDI from India amounted to about US$ 1.7 billion during the period 2005 to 2019. The main investments from India are in the areas of petroleum retail, tourism & hotel, manufacturing, real estate, telecommunication, banking and financial services.

During the virtual bilateral summit between Indian Prime Minister Modi and Sri Lankan Prime Minister Mahinda Rajapaksa in September 2020, the two leaders agreed to deepen cooperation in renewable energy with particular emphasis on solar projects under the US$ 100 million Line of Credit from India. Then on 16 June 2021, the agreement in this regard between the Government of Sri Lanka and the Export-Import Bank of India, was exchanged by the High Commissioner of India to Sri Lanka, Gopal Baglay, and the Secretary to the Treasury, Mr. S.R. Attygalle, in the presence of Sri Lankan President Gotabaya Rajapaksa. 

Defence and security cooperation figured prominently during Basil Rajapaksa’s talks with Ajith Doval. “The Indian National Security Adviser extended a warm welcome to Minister Basil Rajapaksa and engaged in an extremely cordial conversation with him, discussing a range of issues pertaining to the mutual strategic interests,” the Sri Lankan High Commission in New Delhi sated. Earlier High Commissioner to India, Milinda Moragoda explored avenues of further augmenting Defence and Security cooperation with India, when he met Defence Minister of India Shri Rajnath Singh in New Delhi on 30 November. Moragoda thanked the Defence Minister for the support that the Indian defence establishment has been extending to Sri Lanka over the years in many spheres. He thanked India for assisting in controlling the disastrous fires onboard MT New Diamond and MV Express Pearl off the coast of Sri Lanka, which would have resulted in unimaginable marine pollution in the region, had they not been controlled in a timely and efficient manner.

Joint Military and Naval exercises

The High Commissioner also thanked India for the training opportunities accorded to Sri Lankan military students. It was noted that at any given time there are around 700 Sri Lankan military students undergoing training in India. Sri Lanka is the largest single recipient of Indian training berths in the defence sector. The High Commissioner suggested that the possibility be explored for the provision of further training opportunities for Sri Lankan military students in India.

India also sent military aircraft with medical supplies during the COVID-19 pandemic, transporting much needed medical grade oxygen to Sri Lanka by INS Shakti and facilitated transportation of the same by SLNS Shakthi. Another consignment of urgently required nano-nitrogen fertiliser was airlifted by transport aircraft of the Indian Air Force recently. In this context, the offer by the Indian Navy to donate a large-scale oxygen generator to Sri Lanka was also appreciated.

The two sides took note of the annual bilateral Joint Military and Naval exercises and discussed avenues through which the existing bilateral defence and security cooperation could be further strengthened. They also observed with satisfaction the immense progress achieved by the Colombo Security Conclave during the past one year.

The success of Basil Rajapaksa’s visit could be summarised in the statement that, “Indian Ministers expressed New Delhi’s solidarity with Colombo and reiterated that India has always stood by Sri Lanka and, in the current situation, would be guided by its “Neighbourhood First” policy”.

By Sugeeswara Senadhira | Published: 2:00 AM Dec 6 2021

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