What are the four points in the India-Sri Lanka package for economic cooperation
India and Sri Lanka finalised a four-point package on food and energy security to help mitigate the economic crisis plaguing the island nation. This comes in line with Sri Lankan finance minister Basil Rajapaksa who was in New Delhi and met his Indian counterpart Nirmala Sitharaman and external affairs minister S Jaishankar on Wednesday and Thursday. This is the Sri Lankan minister’s first overseas visit since he assumed office in July that concluded successfully on Thursday.
The two neighbours have framed a four-pronged approach and a statement by the Rajapaksa’s office says that the ministers discussed a “range of issues pertaining to mutual strategic interests”. The four pillars for short and medium-term cooperation are the food and health security package, energy security package, currency swap and facilitating Indian investments in Sri Lanka.
The food and health security package is the most urgent need for the island nation, and this would envisage an extension of a line of credit to cover the import of food, medicines and other essential items from India to Sri Lanka. Both sides have agreed that the modalities to realise this package would be “finalised early, within a mutually agreed timeline”, the statement said. The energy security package includes a line of credit to cover the import of fuel from India and an early modernization of Trincomalee Tank Farm.
The invitation to Rajapaksa was extended by Finance Minister Nirmala Sitharaman and the subsequent offer of the package comes after the relationship between the neighbours has been under strain lately. One of the issues in which New Delhi has been miffed with Colombo has been the delay over developing oil infrastructure in Trincomalee. The MOU was signed by former PM Ranil Wickremesinghe in 2017 in New Delhi.
The ties further soured when Colombo scrapped a 2019 deal with India and Japan to operate the East Container Terminal at the Colombo port, much to the irritation of both the countries. The move came after a cabinet meeting chaired by Sri Lankan President Gotabhaya Rajapaksa on February 1 this year, when the country abruptly scrapped the Colombo Port East Container Terminal project. The project was announced by President Gotabhaya on January 13, when India’s External Affairs Minister S Jaishankar was visiting Colombo. The perception was that the Rajapaksa government favoured the Chinese projects and neglected the Indian ones.
Coming back to the package, the Indian offer for currency swap is aimed at helping Colombo address the current balance of payment issues. To aid economic growth and generate employment, New Delhi has committed Indian investments in different sectors in Sri Lanka. This is expected to be made under the South Asian Association for Regional Cooperation (SAARC) facility and is estimated to be worth $400 million. Colombo’s earlier request of $1 billion bilateral currency swap made last year reportedly did not figure in the talks.
The fact that two important Indian ministers chose to engage with the Lankan minister over the two rounds of discussions highlights India’s commitment when it comes to its relationship with Sri Lanka.
The people said Sri Lanka’s request for a $1 billion bilateral currency swap, first made in 2020, did not figure in the latest discussions.
