Sri Lankan President’s visit to India
Present circumstances:
- The president of Sri Lanka, Ranil Wickremesinghe, will visit India on July 21.
- Many projects supported by India are expected to be completed by both nations, particularly in the infrastructure, energy, and tourist sectors.
- A majority of MPs chose Wickremesinghe to address Sri Lanka’s economic problem after the country went into national debt default in April 2022, and the actions made since then are starting to stabilise the economy.
India and Sri Lanka have substantial bilateral relations:
- India is starting to be acknowledged as a real alternative to China for foreign investments due to its expanding industrial sector and ambitious trade agreements.
- Additionally, it puts effort towards developing a welcoming neighbourhood.
- India’s $5 billion in economic assistance to Sri Lanka during its 2022 crisis made the IMF’s $3 billion plan viable, and Sri Lanka is already seeing interest from Indian private investment.
- Sri Lanka’s proximity to China serves to keep it at a distance. India’s unwavering Neighbourhood First strategy will improve the appeal of South Asia as a region.
- From a strategic standpoint, it makes sense that the bilateral connection would extend to the Indian Ocean and, further afield, the Indo-Pacific.
More work needs to be done in order to strengthen bilateral relations.
- As part of a give-take relationship, India currently provides assistance to Sri Lanka.
- Ideal reciprocity would see trade progressively take the place of aid.
- One example is the bilateral relationship between Japan and India. The majority of India’s aid still comes from Japan, but its emphasis has switched from satisfying basic needs and financing healthcare to building infrastructure, including metro lines.
- Japan is currently the fifth-largest investor in India, with a total of $38.7 billion invested there.
India must increase cooperation in the following five areas to improve relations with Sri Lanka:
Diverse humanitarian efforts for Sri Lanka need to be coordinated:
- Indian assistance is currently provided by numerous departments and agencies. A single development bank will be more effective.
- The China Development Bank and the Japan Bank for International Cooperation are two examples of effective strategies for funding big international development endeavours.
- The Asian Development Bank, which is overseen by Japan, serves as a template MDB for South Asia.
Supporting South Asian supply networks beyond production and services:
- If India becomes a hub for manufacturing and services, it can support supply chains in South Asia.
- Important private Indian companies are investing in Sri Lanka.
- The Sri Lankan tourism, agricultural, communications, and automotive industries have already benefited from investments made by the Tata Group.
- They all agree with the Indian government’s plans to fund renewable energy, infrastructure, and tourism in Sri Lanka.
- Sri Lanka will eventually integrate into the new Indian supply chain paradigm as a result of this alignment.
- It is imperative that India and Sri Lanka establish a thorough and superior free trade agreement, with a focus on supply chains and foreign investment. The precursor to this is a trade agreement that India is now negotiating.
In terms of digitization:
- Digital public infrastructure is a major focus of India’s G20 leadership.
- With the aid of India’s open-source fintech, which is among the best in the world, the SDGs of the UN are being realised.
- The adoption of India’s UPI on a global scale is growing. However, it hasn’t been made known to the South Asian neighbourhood.
- Wickremesinghe should make adopting India’s digital public infrastructure for Sri Lanka his top priority.
Improved communication between the central bank governors of India and Sri Lanka:
- There needs to be more substantive communication between the governors of Sri Lanka’s and India’s central banks.
- Regular meetings and the implementation of a mechanism for economic disaster early warning are essential.
- ASEAN was compelled to create a system of mutual monitoring for early warnings and measures to help one another in times of need as a result of the 1997 Asian Financial Crisis.
- It is possible to create a similar agreement between India and Sri Lanka and then apply it to other South Asian countries. These institutional procedures are necessary for regional stability.
More secure bilateral relations:
- It’s no secret that India is most concerned about China’s presence in Sri Lanka.
- Cumulative Chinese investments account for 18.5% of Sri Lanka’s expected GDP in 2021 and 10.8% of the country’s foreign debt.
- China is consequently given sole access to Sri Lanka and its oceans. When a Chinese “research” vessel stopped at the Hambantota Port in August 2022, India was quite upset.
- In the Indian Ocean, Sri Lanka and India continue to have a strategic advantage.
- India, Sri Lanka, and the Maldives already conduct a trilateral naval exercise in addition to actively participating in the major Colombo Security Conclave, which is run by the National Security Advisor and includes Mauritius, Bangladesh, and Seychelles.
- China, despite its frightening economic clout and influence in both island nations, has not been deterred.
- Sri Lanka must be aware of India’s security concerns.
Conclusion:
- An available credit line is blazing the path for both private and public investment, and India has extended support to its neighbour who is experiencing severe financial difficulties.
- If the aforementioned areas of cooperation are implemented further, the bilateral relationship between India and Sri Lanka will continue to strengthen.
