India and Sri Lanka have historically shared a unique bond rooted in cultural, economic, and strategic interdependence. This relationship has been reinvigorated in recent years, particularly in the post-COVID era, as both nations work towards mutual growth and stability. In December 2024, President Anura Kumara Dissanayake of Sri Lanka visited India for his first bilateral engagement since taking office. However, this visit carried additional significance given the historical context of Dissanayake’s political party, which was often perceived as pro-China and had a complicated history with India. During his meeting with Indian Prime Minister Narendra Modi, Dissanayake assured that Sri Lankan territory would not be used in ways inimical to India’s security. President Dissanayake also appreciated India’s critical role in stabilizing the Sri Lankan economy, through emergency financing and forex support valued at USD 4 billion during the Sri Lankan economic crisis. On 27 December 2024, former President Ranil Wickremesinghe delivered the 7th Atal Bihari Vajpayee Memorial Lecture in India and highlighted Vajpayee’s vision and commitment to building strong bilateral ties, even during challenging periods, such as the “dark days” of Indo-Lanka relations from 1983 to 1987 (Civil War Period). He recounted the challenges faced during Sri Lanka’s civil conflict and emphasized Vajpayee’s support for peace initiatives, including a ceasefire agreement with the Liberation Tigers of Tamil Eelam (LTTE).
India and Sri Lanka have identified several key areas of cooperation in recent years, focusing on mutual development and strengthening bilateral ties. The following are the primary areas of collaboration:
Development Assistance
India’s developmental assistance remains the cornerstone of its relationship with Sri Lanka, with support amounting to approximately USD 5 billion. This includes concessional loans and grants targeting infrastructure, health, and education. Flagship projects like the Indian Housing Project (Bharat-Lanka), benefit plantation workers of Sri Lanka. The joint efforts in renewable energy, including the Islands Hybrid Renewable Energy Project, aim to support Sri Lanka’s goal of sourcing 70% of its energy needs from renewables by 2030.
Economic Cooperation
India remains one of Sri Lanka’s largest trading partners, with bilateral trade reaching USD 5.5 billion in FY 2023-24. Indian exports accounted for USD 4.1 billion, while Sri Lankan exports to India stood at USD 1.4 billion. This relationship is strengthened by ongoing negotiations for an Economic and Technology Cooperation Agreement (ETCA), which resumed after a five-year hiatus. India’s foreign direct investments (FDI) in Sri Lanka, totalling USD 2.2 billion till 2023. As co-chair of Sri Lanka’s Official Creditors’ Committee, India’s financial support has played an important role in stabilizing the island nation’s economy.
Capacity Building and Digital Transformation
India’s capacity-building initiatives aim to empower Sri Lanka’s workforce and government institutions. Training programs for 1,500 Sri Lankan civil servants and police officers focus on areas like cybercrime, artificial intelligence, and VIP security. These efforts are supported under the Indian Technical and Economic Cooperation (ITEC) program. India is assisting Sri Lanka in implementing the Sri Lanka Unique Digital Identity (SLUDI) project to enhance government service delivery. The introduction of UPI (Unified Payments Interface) services aims to facilitate digital financial transactions between the two nations.
Energy and Connectivity
Energy collaboration is a cornerstone of Indo-Sri Lankan relations. India is aiding Sri Lanka in developing cross-border electricity grids, multi-product petroleum pipelines, and LNG supplies. Connectivity projects, including port development in Colombo and Trincomalee, as well as resuming passenger ferry services, aim to enhance economic integration. The Economic Land Corridor between Trincomalee and Colombo and expanded air connectivity between Jaffna and Chennai further underscore the nation’s commitment to closer ties.
Security and Tourism
Defense cooperation between India and Sri Lanka is critical for maritime security in the Indian Ocean Region. Joint exercises like SLINEX and MITRA SHAKTI, and initiatives such as the Maritime Rescue Coordination Centre, enhance regional security. Cultural exchanges, high-level visits, and Sri Lanka’s participation in multilateral naval exercises reflect powerful Defense ties. The Colombo Security Conclave serves as an important platform for addressing regional security issues, including counter-terrorism. Tourism and cultural exchanges have been identified as areas for growth, with plans to promote religious and heritage tourism.
Challenges and the Way Forward
Sri Lanka faces ongoing pressures to address India’s concerns regarding China’s strategic influence in the region, which is viewed as a potential threat to India’s security interests. Sri Lanka’s political instability and strategic balancing between India and China often lead to policy inconsistencies, complicating bilateral cooperation. To navigate these complexities, sustained diplomatic engagement and strategic clarity are imperative. The Indo-Sri Lankan partnership represents a strategic alliance grounded in shared history and mutual aspirations. Their collaborative efforts in renewable energy, digital transformation, and defense cooperation signify a forward-looking agenda. Through Security and Growth for All in the Region (SAGAR) and a shared vision for regional prosperity, India and Sri Lanka can continue to build a resilient and cooperative partnership that benefits both nations and contributes to the stability of the Indian Ocean region.
