Sri Lanka and India agree to strengthen economic partnership

The two countries share historic, strategic and trade ties

Indian Prime Minister Narendra Modi welcomes Sri Lankan President Ranil Wickremesinghe to New Delhi. EPA

India and Sri Lanka agreed on Friday to enhance connectivity and conduct feasibility studies on petroleum lines, Indian Prime Minister Narendra Modi said after meeting Sri Lankan President Ranil Wickremesinghe in New Delhi.

Mr Wickremesinghe, who is on a two-day visit, is making his first trip to India since he took over as president a year ago.

His predecessor, Gotabaya Rajapaksa, was forced to quit after widespread protests over the economic crisis – the worst in seven decades – that led to a shortage of fuel, food and medicine.

Mr Wickremesinghe's visit is focused on strengthening economic ties between the neighbouring countries.

“Today we have adopted a vision document for our economic partnership,” Mr Modi said. "This is the vision to strengthen maritime, air, energy and people-to-people connectivity between the people of both the countries.

“The vision is to accelerate mutual co-operation in tourism, power, trade, higher education and skill development.”

The two countries have also signed an agreement to start India's single-window, mobile-based payment system in Sri Lanka that will increase financial connectivity.

Unified Payments System, or UPI, allows the transfer of money between bank accounts.

Sri Lanka, the island nation of 22 million, is located off the southern coast of India in the Indian Ocean and is about 450km from India’s southern state of Tamil Nadu.

The two countries share historic, strategic and bilateral trade ties.

The island nation is at the centre of the Indian government's Neighbourhood-First Policy that focuses on peace and improving ties with India’s immediate neighbours.

India played a significant role of concerned neighbour during the economic crisis in Sri Lanka when it faced severe shortages of fuel, food, medicine and gas and rocketing inflation.

Workers in Colombo this week, where the Sri Lankan central bank expects the economy to recover faster than projected in the second half of the year. EPA

New Delhi assisted cash-strapped Sri Lanka with rice, medicine and milk powder and provided a $500 million line of credit for fuel purchases.

It also pledged support of more than $3.8 billion for “ameliorating the serious economic situation”.

Sri Lanka is of strategic importance to India, which is trying to counter China's growing influence over its neighbour.

China is one of Sri Lanka's biggest lenders and has also funded airports, roads and railways.

New Delhi is also wary of the $1.5 billion Hambantota port in Sri Lanka, built with China’s aid, that is becoming a Chinese military base.

The concern is China will use research ships for maritime surveillance and for gathering intelligence, particularly around India.

Mr Modi also hoped that the Sri Lankan government will ensure the welfare and protect the rights of Sri Lankan Tamils, a religious ethnic community in the country.

A Tamil Tiger security guard during a rally in August 1987 near Jaffna, after the Indo-Sri Lanka Peace Accord was signed. AFP

The country was in the grip of a civil war between Tamil separatists and the government for nearly 26 years before it ended in 2009.

The plight of Sri Lankan Tamils, also known as Eelam Tamils, is an emotional issue in Tamil Nadu.

Many fled to Tamil Nadu after the decades-long civil war and, during the crisis last year, the state received a new influx of refugees.

“We hope that the government of Sri Lanka will fulfil the aspirations of the Tamils and will take forward the process of reconstruction for equality, justice and peace,” Mr Modi said.