Wickremesinghe's Visit to India: Thrust on Connectivity and Economic Integration

Sri Lankan President Ranil Wickremesinghe arrived in New Delhi for a short visit on July 20^th a year after taking charge as the President. After former President Gotabaya Rajapaksa unceremoniously quit the post, in the face of protests in cash-strapped Sri Lanka, Wickremesinghe was elected as President by the Sri Lankan Parliament. Traditionally, India has been the first port of call for Sri Lankan leaders who over the past three decades visited New Delhi within a month of taking office. By that measure, Wickremesinghe’s visit is rather too delayed. But given the extraordinary circumstances under which Wickremesinghe took over, the focus has been on the stabilization of the economy.

Though Wickremesinghe had visited India several times in various positions, this is his first visit as President of Sri Lanka to India. In New Delhi, Wickremesinghe hit the ground running with constructive engagements with EAM Jaishankar and NSA Ajit Doval ahead of his crucial meeting with PM Modi. The visit devoid of the usual pomp and ceremony, commemorated the 75 years of the establishment of diplomatic ties between both countries. Wickremesinghe expressed deep gratitude to India for her, “timely, unprecedented and crucial support” during the recent crisis during his talks with President Droupadi Murmu.

When Sri Lanka was going through the throes of the worst economic crisis, India rushed every possible help and assistance- right from fuel, food, medicines, and other essential supplies. Even as Sri Lanka’s friends looked the other way, India extended assistance to the tune of $4 billion. Without any political or strategic expectations, upholding the “Neighbourhood First” in word and spirit, India stood by Sri Lanka in its dire straits. India lobbied for the International Monetary Fund’s (IMF) Extended Fund Facility of $3 billion for Sri Lanka and co-chaired a creditor’s platform to carve a foreign debt restructuring plan. By extending assistance without any conditionality and by ensuring that it doesn’t add to Sri Lanka’s debt burden, India has positioned herself as a responsible regional power.

Unveiling the “Promoting Connectivity, Catalysing Prosperity: India-Sri Lanka economic partnership vision”¹ a comprehensive joint vision document centered on connectivity, both leaders charted a course for strengthening- maritime, air, land, energy, financial and digital connectivity and people to people ties. Reinforcing the need to integrate both countries through a robust connectivity network, countries announced to resume passenger ferry services between Nagapattinam in India and Kanakasenthurai in Sri Lanka and between Rameshwaram and Talaimannar. The connectivity agenda includes the development of ports and logistics infrastructure at Colombo, Trincomalee, and Kankesanthurai. Underlining the cardinal importance of strengthening connectivity, Wickremesinghe has proposed the idea of a Land Bridge for economic prosperity and regional cohesion.

Boosting air connectivity, plans are afoot to encourage, and strengthen investment in aviation and augment air infrastructure facilities at Palaly, Jaffna International Airport. Besides, resuming flights between Chennai and Jaffna, countries are exploring ramping up connectivity between Chennai and Batticaloa, Trincomalee. India intends to develop Trincomalee, home to Tamilians as a national and regional hub of industry, energy, and economic activity. The ongoing cooperation on Trincomalee Tank Farms is an effort in that direction.

Sri Lanka has set a target of meeting 70% of power requirements through renewable sources by 2030. To enable this, both countries have embarked on a two-pronged approach. Firstly, to deepen cooperation in the wind and solar segments, and secondly, the establishment of a high-capacity power grid for bidirectional power trade between both countries and other BBIN countries. Over a period of time, this can generate a dependable source of foreign exchange for Sri Lanka².

For reliable energy security, both countries are cooperating on the construction of a petroleum pipeline from the Southern part of India to Sri Lanka and agreed to undertake joint exploration and production of hydrocarbons in Sri Lanka’s offshore basins. To increase the renewable energy mix, countries are expediting Sampur Solar power project, cooperation in green hydrogen, green ammonia through innovative technologies.

While a semblance of stability has returned, the arduous conditions of the $ 3 billion IMF loan have mandated Sri Lankan government to tackle corruption, enhance accountability, increase taxes, and reduce subsidies. As per the IMF terms, the country is obligated to adhere to fiscal tightening measures which include lowering the tax threshold since Sri Lanka has the lowest tax-GDP ratio, and a massive cut in government spending on social schemes. These measures are bound to elicit popular backlash. Wickremesinghe who lacks the popular mandate is acutely aware of these challenges. His visit to India is an attempt to ensure Indian support for hastening Sri Lanka’s recovery through economic integration.

Betting on strong economic cooperation with India to catalyse Sri Lankan economy, Wickremesinghe has advocated discussions on the Economic and Technology Cooperation Agreement (ETCA) to facilitate investments and trade in priority areas. As opposed to Sri Lanka’s dillydallying on the MoU signed in 2017 on Comprehensive Economic Partnership Agreement (CEPA), Wickremesinghe is pushing for talks on ETCA.

Ahead of his India visit, addressing the Indian CEO Forum, underscoring the rapid growth of India under the leadership of PM Modi, Wickremesinghe announced, “It makes no difference to us if India (Indian Rupee) becomes common currency. We will have to figure out how to go about it”³. Accordingly, countries have signed an MoU to operationalise UPI-based digital payments and designate the Indian rupee as currency for trade settlements. Inspired by India’s rapid digitalisation which has transformed governance and provided services, countries are now seeking to adopt it.  In fact, Sri Lanka’s ongoing Unique Digital Identity Project is implemented with India’s assistance.

The IMF Blue Print for the sustainable and equitable development of Sri Lanka has made 10 critical recommendations including restructuring State-owned enterprises (SEO)⁴. Pursuing investment from India in the divestment of Sri Lankan SEOs, Colombo affirmed to promote ease of doing business and fair treatment of each other’s investors. A major challenge in working with Sri Lanka has been the continuity of policies and implementation of agreements. In 2021, Gotabaya’s regime cancelled East Container Terminal (ECT) development with India and Japan with Adani as the investor amid protests against the privatisation of the port. “Fair Treatment” insulates from such political uncertainties.

India is the largest source of inbound tourism to Sri Lanka. To expedite the recovery of the crisis-hit island economy at the 67^th Annual Convention of the Travel Agents Association of India (TAAI), Wickremesinghe proposed making the entire BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) area one borderless tourism region. BIMSTEC includes- India, Sri Lanka, Nepal, Bhutan, Bangladesh, Myanmar, and Thailand.

Despite a multi-dimensional agenda for cooperation, suspicions, and skepticism continue to beset the bilateral ties. Commemorating the 200 years of the arrival of Tamils in Sri Lanka, India has raised the issue of devolution of power. Modi asked Sri Lanka to grant provincial autonomy, implement the 13^th amendment, and facilitate a reconciliation process similar to South Africa for Tamils. India has announced a multisectoral development package to support the economic development of the eastern province exclusively centered on Indian-origin Tamil community. Leaders even exchanged views on the arrest of fishermen over illegal poaching by both countries, the most common irritant.

Countries have exchanged a Joint Declaration of Intent on Animal Husbandry and Dairying; four MoUs on cooperation in renewable energy, economic development projects in Trincomalee, acceptance of UPI payments, and energy permit for the Sampur Solar power project⁴. Assuring India’s support and the conviction to consolidate the millennia-old friendship Modi said, “Being a close friend, as always, we stand shoulder to shoulder with the people of Sri Lanka”⁵. 

But the China factor continues to loom large over the India-Sri Lanka relations which have come under strain after Sri Lanka permitted a Chinese nuclear submarine to dock at Colombo in 2014. When the Sri Lankan economy went into a tail-spin and India bailed it out. Notwithstanding India’s help, Colombo allowed the Chinese surveillance ship Yuan Wang-5 to dock at Hambantota. This came days after India gifted a Dornier Maritime aircraft to Sri Lanka. Since the turn of the century, Sri Lanka especially under Rajapaksas has prioritised friendship with China. Though President Maitripala Sirisena had a pro-India approach and underlined to remain neutral China had its way due to its political and economic leverage over Colombo.

Clarifying Sri Lanka’s position over perceived security threats to India, last month, Wickremesinghe, in an interview with French24, media reiterated, “we are a neutral country, but we emphasise the fact that we can’t allow Sri Lanka to be used as a base for any threats against India”⁶. Modi even subtly reminded, “we believe that the security interests and development of India and Sri Lanka are intertwined” and it is necessary to work together keeping in mind each other’s “security interests” and “sensitivities”.

Despite China’s lackadaisical approach during the economic crisis, Sri Lanka continues to juggle ties with New Delhi and Beijing. Wickremesinghe is scheduled for a Beijing visit in October to forge “high-quality belt and road cooperation”. The long-term deliverance of the shared vision of development and sustainable economic growth invariably rests on the fulcrum of trust and confidence. Beijing continues to wield enormous influence through its investments Through deep economic cooperation, India can limit Sri Lanka’s dependence on China.

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