Sri Lankan Prime Minister Ranil Wikremesinghe in New Delhi, Tuesday. China has tried to co-opt Sri Lanka and Maldives into its ambitious ‘One Belt One Road’ initiative to increase its influence in the Indian Ocean region and South Asia. Photo: PTI
Sri Lankan Prime Minister Ranil Wikremesinghe in New Delhi, Tuesday. China has tried to co-opt Sri Lanka and Maldives into its ambitious ‘One Belt One Road’ initiative to increase its influence in the Indian Ocean region and South Asia. Photo: PTI

India renews Sri Lanka ties to counter China influence in South Asia

Prime Minister Narendra Modi and Sri Lanka's Ranil Wikremesinghe sign bilateral deals for economic cooperation during the latter's India visit

New Delhi: India on Wednesday moved to cement closer economic ties with Sri Lanka in a bid to negate the growing influence of strategic rival China in the Indian Ocean region and South Asia.

A pact on economic cooperation was signed on Wednesday in the presence of visiting Sri Lankan Prime Minister Ranil Wikremesinghe and his host Prime Minister Narendra Modi.

“The leaders welcomed the signing of the memorandum of understanding for ‘Cooperation in Economic Projects’, which outlines the agenda for bilateral economic cooperation in the foreseeable future," an Indian foreign ministry statement without giving details. “Both sides expressed their commitment to ensuring that this mutually beneficial agenda is expeditiously implemented," it added.

Analysts said this move by India was aimed at warding off increasing Chinese influence in South Asia which India considers its sphere of influence.

In recent years, China has tried to co-opt Sri Lanka and Maldives into its ambitious “One Belt One Road" initiative—a programme to invest billions of dollars in infrastructure projects including railways, ports and power grids across Asia, Africa and Europe.

“When Prime Minister Narendra Modi took office in 2014, he started off with the ‘neighbourhood first’ approach which has not turned out how he had envisioned," said former foreign secretary Lalit Mansingh.

Given the subsequent hiccups in the ‘neighbourhood first policy’ or placing—a deterioration of ties with Pakistan and strains in India-Nepal ties for instance—Modi seems to be looking at a “new framework of ties" with India’s neighbours with the aim of countering Chinese influence, Mansingh said.

The new formula includes an element of strong economic cooperation, he said, pointing to India announcing the extension of a $4.5 billion line of credit for development infrastructure and other projects in Bangladesh and another $500 million for defence hardware purchases for Dhaka during the 7-9 April visit of Prime Minister Sheikh Hasina to India.

On Sri Lanka’s priority list, however, is a proposal to develop the Trincomalee oil storage tank farm besides discussing the Economic and Technology Cooperation Agreement (ETCA) that the Sri Lankan government is keen to sign with India.

Under the terms of the 1987 India-Sri Lanka accord, the two countries have to jointly develop the 99 oil tanks in Trincomalee, a relic from the British colonial times. At present Indian Oil Corp. Ltd unit Lanka IOC runs 15 out of the 99 storage tanks. The proposed joint venture pertains to the remaining 84 with Sri Lanka proposing to retain 10 of those for use by the Ceylon Petroleum Corp.

During his visit to Sri Lanka in March 2015, Modi had said the project to develop the 84 tanks in Trincomalee would help the coastal town become a regional petroleum hub. However, the project did not take off fully as planned.

Development of the Trincomalee port by India will help it keep an eye on Chinese activities in Beijing-built Hambantota port, Mansingh said.

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