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Sri Lanka: Fast Inclining Towards China
Gaurav Kumar
2018-07-25
Region : Asia, South Asia, Sri Lanka, North East Asia, China,
Issue : Security, Politics,
The Indian Prime Minister Narendra Modi launched a countrywide emergency ambulance service for Sri Lanka on 21 July 2018. Highlighting India’s relation with the strategically important island nation, the PM said, “In good times and bad, India has been, and will always be, the first responder for Sri Lanka.”Although, this has been true for the last few decades, the recent years have witnessed tremendous shift in neighbouring countries relations with India. Traditionally, India was of paramount importance to the South Asia countries, which were predominantly under the Indian sphere of influence, exception being Pakistan, but this day and age India faces unidimensional threat from China’s hegemonic presence in its neighbourhood. With its term nearing an end by 2019, the current government will be looking to showcase some of its achievement in the last 4 years under the flagship Neighbourhood policy; however, it won’t have much to claim about, partly due to lack of vigour on its part, and part due to China’s unprecedented involvement in South Asia.
Sri Lanka is one of India’s largest trading partners in SAARC. India in turn is Sri Lanka’s largest trade partner globally. The two countries have signed FTA in 1998, which facilitated increased trade relations between the two countries. Bilateral trade in 2016 amounted to US $ 4.38 billion. Exports from India to Sri Lanka in 2016 were US$ 3.83 billion, while exports from Sri Lanka to India were US$ 551 million. India is among the top four investors in Sri Lanka with cumulative investments of over US$ 1 billion since 2003. An increasing trend of Sri Lankan investments into India is witnessed in last few years. The Housing Project, with an overall commitment of over Rs 1372 crore in grants, is the flagship project of Government of India’s assistance to Sri Lanka. As on today, around 45,500 houses have been completed.The projects pertaining to Mattala Airport, the Kankasanathurai Port, the sugar factory in Kantale as well as several oil tanks in Trincomalee are being carried out with India.
At the same time, there is significant competition between Indian and Sri Lankan industries. Textiles industry is facing stiff competition from foreign textile industry including our neighbouring countries especially from Bangladesh, Pakistan and Sri Lanka as these countries are taking advantage of unilateral tariff preference scheme granted to developing countries.India, which was a beneficiary of the EU GSP has been graduated out of it in 2014 for textiles and some other products. Sri Lanka is covered under a preference scheme of the EU namely GSP; and hence, it has zero duty access for textiles products into the EU. Similarly, with Sri Lankan tea producers facing a three-pronged challenge, Indian firms are hoping to get a larger share of markets where the former is strong. The largest and prime export markets for orthodox teas from both countries happen to be the same. Russia and the other countries in the Commonwealth of Independent States continue to be the largest buyers of both Indian and Ceylonese orthodox teas, followed by Iran, Japan, America, Egypt. In the last quarter, India has improved its export to some of these countries in comparison to Sri Lanka, and hopes to regain prime destination for export in Iran and Iraq soon. Healthy competition and cooperation have been part of traditional Indo-Sri Lanka relations. However, the China’s growing influence in Sri Lanka presents major challenge to India in the island nation.
Last week, Chinese President Xi Jinping has offered Sri Lanka a fresh grant of 2 billion yuan ($295 million). President Maithripala Sirisena made the announcement at a ceremony marking the start of construction of a Chinese-funded kidney hospital in his home constituency of Polonnaruwa. Initially, Sirisena, who was considered closer to India, had suspended most of the Chinese-backed infrastructure projects started under Rajapaksa over suspected corruption, overpricing and for flouting government procedures. But now it appears that the current President is fast inclining towards the Chinese as he has allowed Chinese projects to resume after a few changes. Chinese funding for the new project in the President’s homes constituency has come amid the reports of Sri Lankan police relaunching investigation into alleged funding of ex-President Mahinda Rajapaksa’s election campaign by China Harbour Engineering Company (CHEC). In June, the New York Times had reported about the alleged CHEC funding Rajapaksa’s election campaign in 2015.
Chinese growing presence is not the only tension India has with Sri Lanka. It has its own share of bilateral irritants that has influenced our relations in the recent past. The large-scale poaching by fishermen is a major point of divergence between the two countries. The key challenge that India faces is that of enforcing maritime border security on movement of the fishing vessels coming from and going into Sri Lankan waters. There is a great deal of concern over this issue in both the Indian State of Tamil Nadu and Sri Lanka because it is a threat to the security of Sri Lanka’s maritime border, its fisheries industry and the livelihoods of northern Sri Lankan fishermen.
Overall, India’s relations with Sri Lanka have improved over a period of time with growing Indian investment in the region; nonetheless, the major bottlenecks are yet to be resolved. With the fast growing influence of China in the countrythat assumes a geostrategic salience in the China’s “new maritime Silk Road" arcing from the Persian Gulf to the Straits of Malacca, as also the so called ‘strings of pearls’ strategy, India will have to act fast and in more consolidated manner.
The views expressed above belong to the author(s)

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