India’s Timely Help Ensured Sri Lanka’s Economic Survival during Crisis

 Did EAM Jaishankar’s visit to Colombo fulfil the Sri Lankan government’s expectations for help with the economic crisis?

I think from our side, yes, very much so. It was the first visit since the new President [Ranil Wickremesinghe] was sworn in last year, and Mr. Jaishankar carried a letter from PM Narendra Modi, inviting him to India soon. I think it needs to be re-emphasised that Sri Lanka’s economic survival today is due to the support provided by India. India’s support came when nobody else would step in. We have now gone to the IMF [International Monetary Fund] for a loan of around $2.9 billion that will be disbursed over several years with many conditions. Whereas in comparison, India actually provided us with $3.9 billion, supporting us with credit lines, currency swaps and helping with our loans – all within a short time period last year. Secondly, India took the lead in advocating for international support. Finance Minister Nirmala Sitharaman herself spoke with IMF and World Bank. And then India wrote to the IMF last week, just before Mr. Jaishankar’s visit, giving assurances on debt restructuring that were much needed. India has been the first to do so, before China, before even the Paris Club. Of course, once the process is done, we need to start looking at economic recovery, and will need India’s support there as well.

 What are the areas of recovery where India can help immediately?

 I think there are three key areas – investment, tourism and trade. In investment, we will need assistance in infrastructure, especially for energy and in particular renewable energy sector. Sri Lanka has immense potential of nearly 30,000 megawatts in wind energy. The only way we can bring in investment to harness that is if we can be part of an electricity grid with India as our requirements alone will not be enough to bring large-scale foreign investment. This would also help us bring down fossil fuel and electricity prices. In addition, there will be opportunities for Indian companies with Sri Lankan asset sales, in telecom, petroleum retail, hotels, insurance companies etc. India was the largest tourism market for Sri Lanka before Covid-19, and I hope we can expand that. I’ve been also talking to aviation companies here to see how Colombo airport can become a hub. Finally, there is trade, and even as we negotiate upgrading our FTA [free-trade agreement] with India, we can look for opportunities to increase market access and to generate rupee revenues like in the apparel sector, and to work out a rupee trade arrangement.

 Do you foresee Sri Lanka joining a South Asia renewable power grid with India, Bangladesh, Bhutan and Nepal?

 That’s the way the world is working now, to share renewable energy regionally. Let’s remember, every crisis is an opportunity. And I think in the power sector, it’s very much an opportunity because our power generation and distribution or transmission are both inefficient, and we need to make it more competitive. So the short answer to your question is, yes. In the past, there were internal lobbies that wanted to protect Sri Lanka from becoming too dependent on external sources of energy – but today, the situation is reversed. Mr. Jaishankar also made it clear that India will go ahead with plans for the energy terminal projects in Trincomalee. If there is enough trust between India and Sri Lanka that Trinco can become part of India’s energy ecosystem, we can move quickly.

 Speaking of trust, have India-Sri Lanka ties recovered from the troubles of last year, over the docking of the Chinese vessel? Going forward how would you balance ties with India and China?

 I think that throughout history, we have had to deal with big-power rivalries, but the reality is, civilizationally, culturally, geographically, we are part of the Indian subcontinent. We value our separate identity and we value our independence, but when it comes to security issues, India’s security is our security, I think our leaders have also stated this. The big lesson is that we must keep channels open, keep talking and that’s how to work out all such problems that come up in the future. Yes, the [Chinese] ship was a blip on the screen, but despite that, we continued to talk, and India did continue to support Sri Lanka and we have been able to establish a new level of trust. In that sense, Mr. Jaishankar’s visit last week has opened a new chapter for India-Sri Lanka ties.