India - Srilanka Development Relationship UPSC IAS Target

India - Srilanka Development Relationship UPSC

07 Jul 2020

Category : International Relations

Topic: India - Srilanka Development Relationship UPSC

There are diplomatic relations between India and Sri Lanka. Sri Lanka has close economic relations with India being the island's largest trading partner and a pact to establish a proto-single market. There is cultural and deep racial relations b/w the two countries. India is the only neighbour of Sri Lanka alienated by the Palk Strait. Both countries occupy a strategic position in South Asia and seek to create a common security umbrella in the Indian Ocean. Both Sri Lanka and India are republics within the Commonwealth of Nations.

They have been tested by the Sri Lankan Civil War and by the debate of Indian intervention during the war. Sri Lanka has now shifted closer to China, especially in terms of naval agreements. India has signed a nuclear energy deal to recover relations. India made a nuclear energy agreement with Sri Lanka in 2015.

Past Relations between India and Sri Lanka

The relation between Sri Lanka & India is more than 2,500 years old. Both countries have a legacy of cultural, religious, intellectual, and linguistic interaction. Now, the relationship has been marked by close contacts at all levels. According to traditional Sri Lankan chronicles like Dipavamsa, Buddhism was introduced into Sri Lanka in the 4th century BCE by respected Mahinda, the son of Indian Emperor Ashoka. During this time, a sapling of the Bodhi Tree was brought to Sri Lanka and the first monasteries and Buddhist monuments were established.

Political Relations

  • Political relations b/w the two countries have been marked by high-level exchanges of visits at regular intervals.
    • President Sirisena travelled to India in October 2016 to attend the BRICS-BIMSTEC Outreach Summit.
    • Srilanka's President visited India on a 4 day visit in 2015 and then in 2016. During the visit, he visited Ujjain, New Delhi and Sanchi.
    • The PM Ranil Wickremesinghe visited India in September 2015, his first overseas visit after being nominated as Prime Minister. PM Wickremesinghe travelled to India in October 2016 for the India Economic Summit.
    • Sri Lanka is a member of regional groupings like BIMSTEC and SAARC in which India plays a leading role.
    • Sri Lanka has long been in India’s geopolitical orbit, but its association with China has strengthened in recent years.
    • Prime Minister Shri Narendra Modi travelled to Sri Lanka in March, 2015. He also travelled to Talaimannar, Anuradhapura, and Jaffna which are war-torn regions. A mega yoga event at Duraiappah Stadium launched the week-long yoga celebrations for 2016 in Sri Lanka. The event was a presentation of 'Surya Namaskar’ by almost 11000 school children.
  • Commercial Relations b/w South-Asian neighbours
    • Sri Lanka has been a priority destination for direct investment from India.
    • Trade b/w the two countries grew rapidly after the entry into force of the Sri Lanka-India Free Trade Agreement in March 2000.
    • Sri Lanka is one of India’s largest trading partner in SAARC. Consequently, India is Sri Lanka’s largest trade partner globally.

Bilateral trade Years
2 billion $ 2005
4.7 billion $ 2015

Exports from India to Sri Lanka in 2015 were US$ 4.1 billion while exports from Sri Lanka to India were US$ 645 million. India is among the top four investors in Sri Lanka with growing investments of over US$ 1 billion since 2003. The investments are in various areas like petroleum retail, real estate, IT, financial services, telecommunication, hospitality & tourism, banking and food processing, metal industries, tires, cement, glass manufacturing, and infrastructure development.
Various new investments from Indian companies are in the pipeline or under implementation. Notable among them are proposals of South City, Kolkota for real estate development in Colombo, ‘Colombo One’ project of ITC Ltd, and Tata Housing Slave Island Development project along with Urban Development Authority of Sri Lanka. On the other side, the last few years have also witnessed a growing trend of Sri Lankan investments in India.

India and Sri Lanka Developmental Cooperation

The GoI put in place a robust programme of assistance to help the IDPs back to normal life as soon as possible. This included the construction of 50,000 housing units, treatment of the Northern Railway lines, wreck-removal and treatment of the KKS Harbour, establishment of Vocational Training Centres, the building of a Cultural Centre at Jaffna, establishing an Agricultural Research Institute in the Northern Province, increasing the scholarship program for Sri Lankan students to pursue their higher studies in India, establishing Centres for English Language Training and providing technical assistance for the National Action Plan for a Trilingual Sri Lanka.
Sri Lanka is one of the major recipients of development credit given by the GoI, with a total of US$2.6 billion, including US$ 436 million as grants. Under a line of credit of $167.4 million, the tsunami-damaged Colombo-Matara rail link has been repaired. Another line of credit of $800 million for track laying and supply of rolling stock to assist the building of railway lines in Northern Sri Lanka is already operational. India is also assisting a large number of smaller development projects in areas, like transport connectivity, education, health, small and medium enterprise development, and training in several parts of the country through its grant funding.