India – Sri Lanka Relations

WHY IN NEWS?

• The Sri Lankan high commission in India has come out with a road map that aims to strengthen ties with India on several areas like trade, defense, connectivity, and people to people with a mandate of two years.

WHY SRI LANKA IS IMPORTANT TO INDIA?

• Maritime security:
  • Sri Lanka is geographically positioned near the major chokepoints- the Gulf of Aden, Strait of Hormuz and the Strait of Malacca.
  • Sri Lanka also has a list of highly strategic ports located among busiest sea lanes of communication. For example: Port of Colombo, Port of Hambantota etc.
  • The Colombo port is crucial for India as it handles 60% of India’s trans-shipment cargo.
  • Thus, a strong presence in the island nation has broad strategic significance for countering piracy and ensuring smooth global maritime trade.
• Countering Chinese presence:
  • China’s strategic interests over India have prompted it to increase its presence in the Indian Ocean through strategies such as the ‘String of Pearl’.
  • One of its key strongholds is the Hambantota port in Sri lanka.
  • Recently Sri Lankan parliament approved the Colombo Port City Economic Commission Bill, which governs the China-backed Colombo Port City project.
  • However, a strong relationship with Sri Lanka can help India counter such strategies.
• Counter terrorism:
  • In April 2019, the island nation was rocked by a series of coordinated Islamic terrorist suicide bombings (known as ‘Easter bombings of 2019’).
  • The presence of such radical elements in the country could serve as a potential launch pad for terrorists targeting India.
• Economic:
  • 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
  • The deepwater trans-shipment hubs in Sri lanka are vital for India’s sea trade. Sri Lanka also has an intrinsic role in advancing blue economy through sustainable management and utilization of marine resources.
• Cooperate in international fora:
  • Since Sri Lanka is an important member of SAARC and BIMSTEC, it is important for India to have Sri Lanka on board to maintain its leadership in the region.
  • Also, Sri Lanka’s favorable stand in developments relating to Jammu and Kashmir and abolition of Article 370 are advantageous for India.
• Diaspora:
  • Both regions share a strong ethnic and cultural relation since the ancient times.
  • This continues today, in the form of tourism circuits, Buddhist pilgrimage and other cultural exchanges
  • There are two groups of Tamils in Sri Lanka. The first are the Sri Lankan Tamils, who descended from the Tamils of the old Jaffna kingdom. The second are the Indian Tamils, who are descendants of bonded labourers sent from Tamil Nadu to Sri Lanka in the 19th century to work in tea plantations.
• Commonality:
  • Being multi-ethnic, multi-religious, multi-lingual and multi-cultural countries, Sri Lanka and India have much in common. The sharing of their similar experiences will be much valuable.

COOPERATION:

• Historic relations:
  • The relationship between India and Sri Lanka is more than 2,500 years old. Both countries have a legacy of intellectual, cultural, religious and linguistic interaction.
  • India and Sri Lanka have enjoyed a cordial and relatively stable relationship since their independence
  • The nearly three-decade long armed conflict between Sri Lankan forces and the LTTE came to an end in May 2009.
  • During the course of the conflict, India supported the right of the Government of Sri Lanka to act against terrorist forces.
  • At the same time, it conveyed its deep concern at the plight of the civilian population, emphasizing that their rights and welfare should not get enmeshed in hostilities against the LTTE.
  • In the post-Liberation Tigers of Tamil Eelam (LTTE) era, the neighbours align over key security and economic objectives, which includes maintaining freedom of navigation in the Indian Ocean region, combating the threat of terrorism, and working together towards a more prosperous South Asian neighbourhood
• Economic relations:
  • Bilateral trade:
    • Trade between the two countries grew particularly rapidly after the signing of the India-Sri Lanka Free Trade Agreement in 2000.
    • 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
    • India is Sri Lanka’s third largest export destination, after the US and UK. More than 60% of Sri Lanka’s exports enjoy the benefits of the India-Sri Lanka Free Trade Agreement.
    • The main items of exports from Sri Lanka to India are poultry feeds, areca nuts, paper and alabaster.
    • Main items of Imports from India to Sri Lanka are petroleum, automobiles, Pharmaceuticals and construction materials.
  • Investment:
    • 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
    • Similarly, investments by Sri Lankan companies in India are also surging. Significant examples include Brandix to set up a garment city in Visakhapatnam.
  • Tourism:
    • Apart from the growth in trade and investment, India has been the largest source market of tourists visiting Sri Lanka, prior to the pandemic.
    • The total number of tourist arrivals from India to Sri Lanka during January-December 2019 was 355,002 i.e. approximately 18.2% of the total tourist arrivals into Sri Lanka.
    • Similarly, Sri Lanka is among the top ten sources of tourists visiting India
  • Cooperation in civil aviation
    • To enhance connectivity between the two nations India and Sri Lanka entered into an Open Sky Agreement enabling Sri Lankan Airlines to operate unlimited number of flights to six Indian airports.
    • Sri Lankan airlines is also the largest foreign carrier in India and was operating over 100 flights per week.
  • Currency swap agreement:
    • RBI has agreed to a $400 million currency swap facility for Sri Lanka till November 2022, under the SAARC Currency Swap Framework 2019-22.
    • Currency swap agreement involve in trading in their own local currencies, where both pay for import and export trade, at the pre-determined rates of exchange, without bringing in third country currency like the US Dollar
  • Bilateral Agreements
    • Several bilateral agreements provide a strong legal framework for developing the economic relationship such as the bilateral Free Trade Agreement, Double Taxation Avoidance Agreement, Bilateral Investment Protection and Promotion Agreement.
    • There are also bilateral agreements/MoUs on Air Services, Agriculture etc.
• Space co-operations:
  • Launch of South Asia Satellite (SAS)
    • South Asia satellite was launched in 2017.
    • Sri Lanka was the first country that agreed to be part of SAS.
    • SAS is being used by the participating countries free of charge for communications and broadcasting applications such as Direct-to-Home television, VSAT terminals, tele-education, tele-medicine and disaster management support.
• Political relations:
  • Diplomatic engagements between India and Sri Lanka have evolved over decades – going from interventionism between 1983-1989 to distancing with displeasure between 1990-2014 to cordial post 2015.
  • India’s ‘Neighbourhood First’ policy towards Sri Lanka had resonated with Sri Lanka’s ‘India First’ foreign and security policy in 2020
• Civil Nuclear Cooperation:
  • In 2015, a bilateral agreement on Civil Nuclear Cooperation was signed between two countries.
  • The Agreement provides for establishment of a Joint Committee to identify the specific areas of cooperation between India and Sri Lanka. The areas of mutual interest include applied nuclear research, production and use of radioactive isotopes in industry, healthcare, agriculture, water management, etc
• Defence and Security Cooperation:
  • Over the years, the two sides have steadily increased their military cooperation.
  • They conduct Joint Military ('Mitra Shakti') and Naval exercise (SLINEX).
  • India also provides defence equipment and training to Sri Lankan forces.
• Development assistance:
  • Sri Lanka is a major recipient of development assistance from India.
  • India’s overall commitment stands close to US$ 3 billion, out of which around US$ 560 million are purely in grants.
  • India assists in projects in areas of education, health, housing, transport connectivity, small and medium enterprise development and training across the country under grant assistance.
  • Grant projects:
    • ‘Indian Housing Project’ and ‘Emergency Ambulance Service’ are the two largest Indian grant project in Sri Lanka.
    • Grant assistance for the rehabilitation of runway and basic infrastructure at the Palaly Airfield is also a significant example.
  • Concessional financing projects in Sri Lanka
    • India has provided concessional financing of over USD 1.8 billion to Sri Lanka through the various Lines of Credit (LoC) funded by EXIM Bank of India
    • For ex: Line of Credit of USD 100 million for Solar Projects in Sri Lanka
  • Training programmes
    • India provides training opportunities to over 400 officials in Sri Lanka annually for skill development and capacity enhancement under the Indian Technical and economic Cooperation Programme (ITEC).
    • These training programmes are fully funded by Government of India
  • Buyer’s Credit projects:
    • India is partnering Sri Lanka in its endeavour to provide access to clean water and sanitation.
    • As a part of this effort, some water projects in Sri Lanka are being funded by the EXIM Bank of India under Buyer’s Credit scheme such as the: Greater Dambulla Water Supply Project
  • COVID-19 assistance and vaccines
    • India recently sent about 150 tonnes more oxygen to Sri Lanka to help the island nation combat the third wave of the COVID-19 pandemic.
    • Close to 26 tonnes of essential medical supplies were gifted in April-May 2020.
    • The first consignment of vaccines, which was donated by India in January 2021, enabled Sri Lanka to roll out its vaccination programme ahead of the schedule
• Cultural relations:
  • The Cultural Cooperation Agreement signed by the two Governments in November, 1977, forms the basis for periodic Cultural Exchange Programmes between the two countries.
  • The Indian Cultural Centre in Colombo actively promotes awareness of Indian culture by offering classes in Indian music, dance, Hindi and Yoga.
  • In 2020, India announced USD 15 million grant for promotion of Buddhist ties with Sri Lanka.
• People to people contact:
  • Indian Origin Tamils (IOTs) form an important part of Lanka’s demographics.
  • The population of IOTs is about 1.6 million. Besides this, unofficial statistics estimates that around 14,000 Indian expatriates are living in Sri Lanka, mostly engaged in various business ventures.
• Human resource development:
  • India offers scholarships annually to Sri Lankan students.
  • Under the Indian Technical and Economic Cooperation Scheme and the Colombo Plan, India offers 400 slots annually to Sri Lankan nationals for training courses in technical and professional disciplines.
• Arrangements to deal with the fishermen issue:
  • Both countries have agreed on certain practical arrangements to deal with the issue of bona fide fishermen of either side crossing the International Maritime Boundary Line.

ISSUES IN RELATION:

• Tamil issue:
  • The UN estimates that about 40,000 Tamil civilians were massacred by the military in the final months of Colombo’s war against the LTTE that ended in May 2009.
  • India has always been sympathetic to the needs of Tamil population in Sri Lanka.
  • India maintains a close association with Tamil National Alliance (it is a political alliance in Sri Lanka that represents the country's Sri Lankan Tamil minority).
  • India always stressed our longstanding support for the reconciliation that addresses aspirations of the Tamil community for equality, justice, peace and dignity within the framework of a united Sri Lanka and in accordance with the 13th Amendment.
• Disagreement over 13th amendment of the Constitution:
  • 13th amendment was sought to grant regional autonomy as a political solution to the Sinhalese-Tamil conflict. The amendment calls for the establishment of Provincial governments, finance commission, High courts etc. Also, Tamil was made an official language along with the Sinhalese.
  • The 13th amendment emerged from the July 1987 Indo-Lanka Accord to disarm the LTTE.
  • Successive Colombo governments have been hostile to any power-sharing with the Tamil minorities and have not fully implemented this amendment.
  • The current Rajapaksa government has made no commitment on how the amendment will be implemented, and stated that certain areas of 13th amendment cannot be implemented.
  • However, India has always emphasised on a meaningful devolution package based on the 13th Amendment.
• India did not support Sri Lanka in UHRC:
  • India in March 2021 abstained from a crucial vote on Sri Lanka’s rights record at the United Nations Human Rights Council.
  • The resolution on ‘Promoting reconciliation, accountability and human rights in Sri Lanka’ was, hence adopted after 22 states of the 47-member Council voted in its favour.
  • However Sri Lanka rejected the UN move to collect and preserve evidence of war crimes in the country, committed by the armed forces and the LTTE.
  • Sri Lanka accuses that the resolution is “politically motivated”.
• China factor
  • Sri Lanka’s drift towards China
    • Over the years, Sri Lanka has drifted towards China for economic support and views her as a more reliable partner in enabling domestic economic development
    • This has generated concern in New Delhi over the state of the bilateral relationship between the two countries, which views Beijing’s proximity to its neighbours as undermining India’s influence in the island nation.
    • Sri Lanka’s embrace of China largely stems from two factors.
      • First, Sri Lankans continue to be suspicious about India’s motives vis-a-vis the Tamil cause.
      • Second, India’s slow bureaucratic processes that delay approvals incite suspicions of India’s commitment to Sri Lanka
  • Increasing Chinese investments:
    • China’s deep pockets are evident in the number of projects in Sri Lanka, including investments in the Colombo International Financial Center, Colombo-Kandy highway, oil refineries, and Colombo Port City (It is an important component in Beijing’s Belt and Road Initiative).
    • China in April 2021 signed a $500 million loan agreement with Sri Lanka
  • Chinese debt trap:
    • The cash-strapped Colombo regime, which faces a deepening economic crisis worsened by the pandemic, is increasingly reliant on investment and loans from Beijing.
    • As of June 2019, China’s loans to the Sri Lankan public sector amounted to 15% of the central government’s external debt, making China the largest bilateral creditor to the country.
    • Unable to service its debt, in 2017, Sri Lanka lost the unviable Hambantota port to China for a 99-year lease.
    • Nevertheless, Sri Lanka has increasingly relied on Chinese credit to address its foreign debt burden.
    • Sri Lanka’s economic crisis may further push it to align its policies with Beijing’s interests.
  • Pro-china governments:
    • Former President Mahinda Rajapakse’s close relations with Beijing provided his government with financial assistance and military hardware from China
• Downturn in economic co-operations:
  • Sri Lanka scrap a 2019 agreement with India and Japan for operating the East Coast Terminal (ECT)
    • The ECT project was crucial for India because >> more than two-thirds of trans-shipment at this port is tied to India, making it an important trade and connectivity link. Moreover development of ECT with India’s participation could be a counter to China’s BRI
    • However, the West Coast Terminal was offered under a public private partnership arrangement to Adani Ports and Special Economic Zones Ltd.
  • India unilaterally terminated the India-Sri Lanka Bilateral Investment Treaty (BIT) in 2017
• SAARC v/s BIMSTEC:
  • Sri Lanka wants to see cooperation and progress in SAARC, whereas India believes that all efforts to strengthen regional cooperation should be channeled to the BIMSTEC.
• Economic crisis in Sri Lanka:
  • Sri Lanka’s government declared an economic emergency in Sept 2021 amid rising food prices, a depreciating currency, and rapidly depleting forex reserves.
  • President Gotabaya Rajapaksa has called in the army to manage the crisis by rationing the supply of various essential goods.
  • Sri Lanka’s fragile liquidity situation has put it at high risk of debt distress. Its public debt-to-GDP ratio was at 109.7% in 2020, and its gross financing needs remain high at 18% of GDP, higher than most of its emerging economy peers
  • Our Neighbourhood First policy had led to increased economic cooperation with Sri Lanka but its economy is in deep trouble and India’s relations with it have taken a turn for the worse this year.
• Constitutional instability:
  • Sri Lanka's constitution has been changed 19 times from 1978, creating a lot of uncertainties and confusion.
• Environmental concerns:
  • Unsustainable fishing, rising sea levels and climate change will put the island nation further at risk of endangering its relative prosperity.
  • In order to protect the islands, they need strong investments and it needs to be seen if India can cater to this demand.
• Fisherman issue:
  • A maritime dispute between India and Sri Lanka remains unsolved, despite an agreement 47 years ago.
  • Notwithstanding the 1974 Indo-Lanka Maritime Boundary Agreement, Indian fishermen tend to cross the maritime border into Sri Lanka in the Palk Strait, which in turn leads to assaults by the Sri Lankan Navy.

WAY FORWARD:

• Strengthen ties:
  • Since the 2019 election, India has moved quickly with development projects and other assistance to draw Sri lank back into India's fold.
  • Now India has to ensure the timely completion of these projects and reassure its position as a reliable ally.
  • Nurturing the Neighbourhood First policy with Sri Lanka will be important for India to preserve our strategic interests in the Indian Ocean region.
• Leverage regional platforms to foster cooperation
  • Regional platforms like the BIMSTEC and the Indian Ocean Rim Association could be leveraged to foster cooperation in common areas of interest like technology-driven agriculture and marine sector development, IT and communication infrastructure, renewable energy etc.
• Economic support:
  • New Delhi’s economic outreach, like the line of credit is key to helping Sri lanka break free of Beijing’s “debt-for-leverage” model of diplomacy.
  • Also, to deepen its engagement with the Sri Lankan economy, India needs to encourage its private sector enterprises (such as telecom) to invest in the region.
  • Moreover we need to finalize negotiations on Comprehensive Economic Partnership Agreement (CEPA) and Economic and Technology Co-operation Agreement (ETCA).
• Resolve fishermen issues efficiently:
  • India and Sri Lanka have agreed to set up a Joint Working Group (JWG) as the mechanism to help find a permanent solution to the fishermen issue. They need to be more proactive in dealing with the issue of detention of fishermen in a humane manner.
• Security cooperation:
  • Both countries should strengthen cooperation in areas of counter-terrorism, counter-radicalisation and drug trafficking, through measures like regular intelligence sharing and frequent joint security exercises.
  • India must also push for reconciliation efforts for the Tamils while remaining sensitive to Lanka’s security concerns
• Leveraging India’s soft power:
  • India must employ its cultural aspects like diaspora, films, music, and people to people interaction to strengthen relations with Sri Lanka.
  • Two countries can look to create a Buddhism knowledge and tourism corridor.
  • In the technology sector, India could create job opportunities by expanding the presence of its information technology companies in Sri Lanka. These organisations can create thousands of direct and indirect jobs and boost the island nation’s service economy.
  • Expanding the Indian Premiere League (IPL) to Sri Lanka in partnership with Lanka Premier League (LPL) will encourage people-to-people contact and boost tourism.
• Sharing experience Constitution building:
  • As Sri Lanka embarks on the arduous project of drafting a constitution, India can lend its own experience in managing minority rights and diverse populations.
  • It can help Sri Lanka draft policies ensuring linguistic and cultural freedom, access to grievance redressal, and reservation in representative bodies.
• Sustainable development:
  • India is a global frontrunner in the efforts towards sustainable development and countering climate change.
  • India can help the Sri Lanka adapt to climate change through deepen engagements in renewable energy, sustainable fishing and coastal area management.
• Strategic cooperation:
  • India has agreements with countries like U.S. and France to use their naval facilities in Djibouti, Diego Garcia etc, if required.
  • In this line, India should explore the possibilities of closer cooperation with countries like Australia and African nations to further counter the Chinese growth in Indian Ocean.
  • India can never match Beijing’s economic wherewithal to make a difference to Colombo’s developmental requirements. But it can carve out a niche role in some areas and also partner smartly with likeminded strategic partners like Japan to make an economic and strategic difference in Sri Lanka.
• Addressing Tamil persecution:
  • India needs to press the Rajapakse government on four issues:
    • The removal of the Prevention Terrorism Act (PTA) >> which is misused to persecute Tamil minority.
    • The release of political prisoners
    • An end to land acquisitions in the North and East and release of land forcibly acquired by the military during the civil war.
    • Fully implement the 13th constitutional amendment.

PRACTICE QUESTION:

Q. ‘As Sri Lanka moves closer to China in its economic ties, concerns about the Indo-Sri Lanka bilateral relationship grow’. Discuss