PM Modi, Sri Lankan President Ranil boost ties, unveil a new economic partnership

By, New Delhi
Jul 22, 2023 04:49 AM IST

India and Sri Lanka have announced a new economic partnership that includes maritime, air, energy, and financial connectivity.

India and Sri Lanka on Friday unveiled a new economic partnership for maritime, air, energy and financial connectivity, including the use of India’s Unified Payments Interface (UPI) system, even as New Delhi pressed Colombo on a political solution to fulfil the aspirations of the Tamil minority.

Sri Lanka’s President Ranil Wickremesinghe shakes hands with Prime Minister Narendra Modi on Friday. (Raj K Raj/HT Photo)
Sri Lanka’s President Ranil Wickremesinghe shakes hands with Prime Minister Narendra Modi on Friday. (Raj K Raj/HT Photo)

The India-Sri Lanka Economic Partnership Vision, issued after talks between Prime Minister Narendra Modi and President Ranil Wickremesinghe, includes a power grid interconnection for electricity trade, construction of a petroleum pipeline, a feasibility study for land connectivity, and resumption of talks on an Economic and Technology Cooperation Agreement to replace an existing trade deal.

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Also Read | Not just Sri Lanka, these countries have also accepted India's UPI

Following an agreement between India’s NPCI International Payments Limited (NIPL) and Lanka Pay, UPI is set to be accepted in Sri Lanka after completion of certain processes in the next two to three months. As a follow-up to the 2022 deal on the Trincomalee oil tank farms, the two sides signed an agreement to develop the facility as a regional hub of industry and energy.

Participating in a media interaction with Wickremesinghe, Modi said Sri Lanka has a key place in India’s “Neighbourhood First” policy and SAGAR (Security and Growth for All in the Region) vision. Referring to the unprecedented economic crisis that hit Sri Lanka over the past year, he noted that India stood “shoulder to shoulder” with the island nation in its hour of crisis.

“We believe the security interests and development of India and Sri Lanka are intertwined and therefore, it is essential that we work together keeping in mind each other’s safety and sensitivities,” Modi said, speaking in Hindi. The remarks were seen as an apparent reference to bilateral ties being hit last year by Sri Lanka’s decision to allow a visit to Hambantota port by a Chinese surveillance vessel.

“A stable, secure and prosperous Sri Lanka is not only in India’s interest, but in the interest of the entire Indian Ocean region,” he added.

Wickremesinghe expressed “profound appreciation” for India’s support during the economic downturn. India extended economic support worth almost $4 billion to help Sri Lanka tide over the crisis.

Besides strengthening connectivity in different spheres, the new economic partnership reflects India’s long-term commitment to Sri Lanka and will accelerate cooperation in tourism, power, trade and education, Modi said.

Modi expressed the hope that Sri Lanka’s government will fulfil the aspirations of the island nation’s Tamil minority and “drive the process of rebuilding for equality, justice and peace”. He called on Sri Lanka to fulfil its commitment to implement the 13th constitutional amendment, conduct elections to provincial councils and ensure a “life of respect and dignity” for the Tamils.

To mark 200 years of the arrival of Tamils in Sri Lanka, Modi said projects worth 75 crore will be implemented for the Indian-origin community. India will also contribute to development programmes in Sri Lanka’s northern and eastern regions that have a sizeable Tamil population.

Wickremesignhe said he shared with Modi a proposal he presented to Sri Lanka’s Tamil leadership this week for furthering reconciliation and power-sharing. “I have invited all party leaders in Parliament to work towards consensus and national unity on these measures. Thereafter, the government will place relevant legislation before Parliament,” he said, adding Modi “expressed solidarity and goodwill” for these steps.

However, Sri Lanka’s Tamil National Alliance (TNA) has rejected the proposal as it envisages devolution with the “exception of police powers”. Tamil leaders have pointed out that provincial councils have been virtually defunct for five years.

Asked about these matters at a media briefing, foreign secretary Vinay Kwatra said India continues to back a political solution that addresses the aspirations of the Tamils for equality, justice and self-respect within the framework of a united Sri Lanka. Modi raised these aspirations and emphasised that meaningful devolution of powers is essential for reconciliation, he added.

As part of maritime connectivity under the new economic partnership, the two sides will resume passenger ferry services between Nagapattinam in India and Kankesanthurai in Sri Lanka and work for resumption of similar services between Rameshwaram and Talaimannar. They will cooperate to develop ports and logistics at Colombo, Trincomalee and Kankesanthurai.

Following the resumption of flights between Jaffna and Chennai, the two sides will increase flights to Colombo and explore connectivity between Chennai and Trincomalee, Batticaloa and other destinations in Sri Lanka.

In the field of energy connectivity, the proposed high-capacity power grid interconnection will enable bidirectional electricity trade between Sri Lanka and other regional countries. A memorandum of understanding (MoU) for cooperation on renewable energy will facilitate development of offshore wind and solar in Sri Lanka.

The two sides will work towards the Economic and Technology Cooperation Agreement (ETCA) to enhance bilateral trade and investments in new areas. The two countries held 11 rounds of talks on ETCA till negotiations stalled in 2019. The ETCA is meant to replace a free trade agreement signed in 1998.

The Indian side agreed to facilitate investments for the divestment of Sri Lankan state-owned enterprises and in manufacturing and economic zones in various sectors. The two sides further agreed to leverage India’s digital public infrastructure in line with Sri Lanka’s needs for effective delivery of citizen-centric services.

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