Comprehensive Vision Of Indo-Lankan Cooperation Emerges From Wickremesinghe’s State Visit – Analysis

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Envisages sustainable, equitable and stable growth which will benefit all segments of Sri Lankan society in all parts of the country, and also promote reconciliation

The Prime Minister of India Narendra Modi and the President of Sri Lanka Ranil Wickremesinghe had “productive and outcome-oriented” discussions in their interactions in New Delhi on July 21, the “Vision Statement” released in New Delhi at the end of Wickremesinghe’s State Visit said.

The leaders acknowledged that the India-Sri Lanka partnership has been a source of strength in overcoming economic difficulties faced by Sri Lanka and the President of Sri Lanka specially appreciated India’s timely, unprecedented, and crucial support to the Government and the people of Sri Lanka.

Both leaders reiterated their firm commitment to, and confidence in, democracy, stability and economic recovery in Sri Lanka, and stressed the significance of India’s continued support and investment for sustainable, equitable and stable growth which will benefit all segments of Sri Lankan society in all parts of the country, and also promote reconciliation.

The two leaders agreed that India’s sustained and rapid economic growth, and technological advancement coupled with the current phase of tabilization and economic recovery, reconstruction and growth in Sri Lanka, provides a unique opportunity to forge a closer and deeper bilateral economic partnership between the two countries and enhance growth in the Indian Ocean Region.

Further, the leaders underscored the unparalleled advantages afforded by civilizational ties, geographical proximity, cultural connect and age-old goodwill between the peoples of the two countries and reaffirmed their endeavor to harness existing synergies and complementarities in a manner that brings shared and sustainable economic prosperity.

To this end, the leaders underlined the cardinal importance of promoting and strengthening connectivity in all its dimensions as the key enabler. Accordingly, both leaders have decided:

I. Maritime Connectivity:

a.To cooperate in development of ports and logistics infrastructure at Colombo, Trincomalee and Kankesanthurai with an aim to consolidate regional logistics and shipping, as per mutual understanding;

b. To resume passenger ferry services between Nagapattinam in India and Kankesanthurai in Sri Lanka and work towards early resumption of ferry services between Rameshwaram and Talaimannar, and other mutually agreed places.

II. Air Connectivity:

a. That resumption of flights between Jaffna and Chennai have 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;

b. To encourage and strengthen investment and cooperation in civil aviation, including augmentation of airport infrastructure at Palaly for greater economic benefits to the people;

III. Energy and Power Connectivity:

a. That the conclusion of an MoU on cooperation in developing renewable energy would develop Sri Lanka’s significant renewable energy potential, including offshore wind and solar, thus enabling Sri Lanka to achieve its target of generating 70% of power requirements from renewable energy sources by 2030;

b. To establish a high capacity power grid interconnection between India and Sri Lanka to enable bidirectional electricity trade between Sri Lanka and other regional countries, including the BBIN countries comprising Bangladesh, Bhutan, India, Nepal, which has the potential to not only bring down the costs of electricity in Sri Lanka but also help create a valuable and dependable source of foreign exchange for Sri Lanka;

c. To expedite implementation of understanding reached on Sampur Solar power project and LNG infrastructure, and explore cooperation in green hydrogen and green ammonia through use of innovative technologies with an aim to increase renewable energy mix in power generation of Sri Lanka.

d. That ongoing cooperation in development of Trincomalee Tank Farms is a reflection of our endeavour to develop mutually beneficial cooperation projects in Trincomalee area, and agreed to further develop Trincomalee as a national and regional hub of industry, energy and economic activity on the basis of mutual understanding;

e. To cooperate for construction of a multi-product petroleum pipeline from the Southern part of India to Sri Lanka with an aim to ensure affordable and reliable supply of energy resources to Sri Lanka;

f. To undertake mutually agreed joint exploration and production of hydrocarbons in Sri Lanka’s offshore basins with an aim to develop Sri Lanka’s upstream petroleum sector.

IV. Trade, Economic and Financial Connectivity:

a. That salience of bilateral trade and economic engagements was significantly demonstrated during COVID pandemic and economic crisis of Sri Lanka, and agreed to facilitate mutual investments through, inter alia, policy consistency, promoting ease of doing business and fair treatment of each other’s investors;

b. To facilitate investments from India in the divestment of Sri Lankan State-owned Enterprises and in manufacturing/economic zones in various sectors in Sri Lanka;

c.To undertake discussions on Economic and Technology Cooperation Agreement with an aim to comprehensively enhance bilateral trade and investments in new and priority areas;

d. That decision to designate INR as currency for trade settlements between the two countries has forged stronger and mutually-beneficial commercial linkages, and agreed to operationalise UPI-based digital payments for further enhancing trade and transactions between businesses and common people.

e. That India’s rapid digitalisation is an important force-multiplier for ongoing transformational changes in India, both in economic development and governance, and agreed to leverage India’s Digital Public Infrastructure in accordance with Sri Lanka’s requirements and priorities towards effective and efficient delivery of citizen-centric services to the people of Sri Lanka;

V. People-to-People Connectivity:

a. To promote awareness and popularize India’s Buddhist circuit, and Ramayana trail as well as ancient places of Buddhist, Hindu and other religious worship in Sri Lanka for enhancing tourism;

b.To explore cooperation between educational institutions on both sides including through establishment of new higher education and skilling campuses in Sri Lanka in accordance with Sri Lanka’s requirements and priorities;

c. To expand cooperation between research and academic institutes in areas of mutual interests such as agriculture, aquaculture, IT, business, finance and management, health and medicine, earth and marine sciences, oceanography, space applications, as well as history, culture, languages, literature, religious studies and other humanities;

d. To establish land connectivity between Sri Lanka and India for developing land access to the ports of Trincomalee and Colombo, propelling economic growth and prosperity in both Sri Lanka and India, and further consolidating millennia-old relationship between the two countries. A feasibility study for such connectivity will be conducted at an early date.

Both the leaders directed their respective officials concerned to expedite the realization of this shared vision, which will not only impart long-term direction and significant momentum to bilateral cooperation for growth and prosperity in both countries and in the wider region, but also set the future direction of a dynamic India-Sri Lanka relationship, founded on enhanced mutual confidence and trust.

Investment and Trade Rather than Debt

India’s Foreign Secretary, Vinay Kwatra, told the media in New Delhi on Friday after the conclusion of talks between Prime Minister Narendra  Modi and the visiting Sri Lankan President Ranil Wickremesinghe, that in its economic relations with Sri Lanka, India prefers to take the path of investment and trade rather than extending credit.

Asked how India plans to fund the many projects mentioned in the Vision Statement on India-Sri Lanka relations issued at the end of Modi-Wickremesinghe talks, Kwatra said that India is cognizant of Sri Lanka’s financial position and the debt restructuring that it is engaged in at present. India will, therefore, design its funding in an appropriate manner. A part of the funding will be on credit basis and a part in grants.

On India’s desire to invest in institutions from which the Sri Lankan government plans to withdraw as part of a disinvestment program, Kwatra said that Indian investment will depend on the institutions to be privatized and the terms and conditions for disinvestment set by the Lankan government.

The Indian private sector will also be interested in this area, but its members will have their own considerations, Kwatra added.

As for tariffs and other issues in trade, India and Sri Lanka will be discussing all issues including Non-Tariff Barriers.

Asked about the disbursement of the US$ 4 billion line of credit extended to Sri Lanka by India to tide over the economic crisis, Kwatra said that most of it has been disbursed. A part of the Indian debt will be included in the debt restructuring being worked out and a part will be outside it.

However, India will insist that all creditors are brought under the same conditions with none getting preferential treatment. The allusion was to China, which is keeping its cards close to its chest on this issue.

On India-Sri Lanka connectivity projects, Kwatra said that the idea of giving India land access to the ports of Colombo and Trincomalee was proposed by the Sri Lankan President. 

“Both leaders agreed to take this forward through a feasibility study,” Kwatra said, quoting Prime Minister Modi. Modi had said that land connectivity will help bring about economic prosperity to Sri Lanka and India and cohesion to the region.

On the Unified Payments Interface (UPI) between India and Sri Lanka, Kwatra said that it would take two or three months to come into effect with both sides working on the system.

Chinese Footprint

Asked if the Sri Lankan President gave any assurances on safeguarding India’s concerns about the increasing Chinese foot print in Sri Lanka, Kwatra that the Indian Prime minister had raised the maritime dimension and Wickremesinghe said that he was aware of India’s concerns and sensitivities. The issue was viewed as a “shared challenge,” Kwatra said.

P. K. Balachandran

P. K. Balachandran is a senior Indian journalist working in Sri Lanka for local and international media and has been writing on South Asian issues for the past 21 years.

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