India-Sri Lanka Relations - 2 | UPSC Mains: International Relations PDF Download

Commerce/Trade Relations:

• Sri Lanka is India’s second largest trading partner in SAARC.
• India and Sri Lanka signed FTA in 1998, which facilitated increased trade relations between the two countries.
• Sri Lanka is one of India’s largest trading partners in SAARC. Trade between the two countries grew particularly rapidly after the entry into force of the India-Sri Lanka Free Trade Agreement in March 2000.
• Sri Lanka has long been a priority destination for direct investment from India. India is among the top four investors in Sri Lanka with cumulative investments of over US$ 1 billion since 2003.
• Economic and Technological Cooperation Agreement (ETCA): The proposed ETCA between India and Sri Lanka would facilitate trade in services, investments and technological cooperation. With ETCA signed, Indian investments will flow into Sri Lanka to make the island’s production facilities part of the Indian and international value chain.
• Sri Lanka is one of India’s largest trading partners among the SAARC countries. India in turn is Sri Lanka’s largest trade partner globally.
  (i) India’s exports to Sri Lanka amounted to $5.3 billion in 2015-17 whereas its imports from the country were at $743 million
• The agreement CEPA (Comprehensive Economic Partnership Agreement) which is yet to be signed between the countries, seeks to build on the momentum generated by the FTA and take the two economies beyond trade in goods towards greater integration and impart renewed impetus and synergy to bilateral economic interaction.
  (i) The investments are in diverse areas including petroleum retail, IT, financial services, real estate, telecommunication, hospitality & tourism, banking and food processing (tea & fruit juices), metal industries, tires, cement, glass manufacturing, and infrastructure development (railway, power, water supply.

Development Cooperation:

Tourism:

Defence and Security Cooperation:

• Colombo and New Delhi have long history of security cooperation. In recent years, the two sides have steadily increased their military-to-military relationship.
• India and Sri Lanka conducts joint Military (‘Mitra Shakti’) and Naval exercise (SLINEX).
• India also provides defence training to Sri Lankan forces.
• A trilateral maritime security cooperation agreement was signed by India, Sri Lanka and the Maldives to improve surveillance, anti-piracy operations and reducing maritime pollution in Indian Ocean Region.
• In April 2019, India and Sri Lanka also concluded agreement on countering Drug and Human trafficking.
• In the aftermath of the horrific Easter bombings, Sri Lankan Prime Minister thanked the Indian government for all the “help” given.
• The most significant aspect is that of civilian nuclear co-operation, which envisages an “exchange of knowledge and expertise, sharing of resources, capacity building and training of personnel in peaceful uses of nuclear energy.
• The third joint exercise, called “Dosti,” is a trilateral coast guard exercise that includes the Maldives.

India-Sri Lanka: Issues and Conflicts:

Strategic Issues – China factor:

• In recent years, China has extended billions of dollars of loans to the Sri Lankan government for new infrastructure projects.
• This is not good for India’s strategic depth in Indian Ocean Region (IOR).
• Sri Lanka handed over the strategic port of Hambantota, which is expected to play a key role in China’s Belt and Road Initiative, to China on a 99-year lease.
• It has also been supplying arms to Srilanka.
• China has invested sufficiently in building Colombo international container terminal by China Harbor Corporation.
• In the period of low profile relationship between the two nations, Sri Lanka apparently started favoring China over India.
• As part of Maritime Silk Route (MSR) policy, China built two ports, one in Colombo and another in Hambantota.
• China has also collaborated in satellite launching activities with Supreme SAT (Pvt.), Sri Lanka’s only satellite operator.