Talks on trade, power, China on the cards as Sri Lanka president visits India

The visit comes even as Sri Lanka continues to grapple with a protracted economic crisis. Inflation remains high at 25.2% despite cooling since January, according to the country’s central bank. The International Monetary Fund (IMF) has forecast that Sri Lanka’s economy is expected to contract 3.1% in 2023. Millions have been plunged into poverty as the country’s economy has struggled. Wickremesinghe has spent much of his year in office pushing painful economic reforms. His government has raised taxes, hiked interest rates and has also batted for the privatization of state-owned banks and airlines.

India moved quickly to help Sri Lanka stabilize its economy and provided close to $4 billion in assistance to the island nation. This included credit lines for the purchase of food and essential medicines as well as currency swap arrangements. India also provided financing assurances to the IMF as it mulled a $2.9 billion bailout for Sri Lanka, which was eventually approved in May 2023.

As Wickremesinghe visits Delhi, economic matters may be foremost on the agenda. Both sides are expected to explore avenues to increase trade, through settlement in national currencies among other proposals. Sri Lanka will also be looking for increased investment from India. In the leadup to the visit, Tata Sons Chairman N Chandrasekaran visited the country. Reports in Sri Lanka’s media speculated that Tata may be eyeing Sri Lankan Airlines, one of the state owned companies that Wickremesinghe’s government in looking to privatize.

Both countries may also discuss an ambitious proposal to link their power grids. Mint had reported in January that both governments were in talks to set up a link for transferring power.

“India today has a very robust power grid running from north to south and east to west of the country. In future we would like to see the grid connected to neighbouring countries including Myanmar, Sri Lanka, and then expand that connection to Southeast Asian Countries, to emerge as a unified market,” said Ajay Tewari, additional secretary, Ministry of power in December 2022.

China’s presence in the Indian Ocean is also likely to feature in talks, given its importance to India. New Delhi has been worried over the presence of Chinese spy vessels, most notably the Yuan Wang-5, which docked in Hambantota port in August 2022 despite Indian objections. Yuan Wang-6, another research vessel, which entered the Indian Ocean even as India planned a test launch of its nuclear capable Agni-ballistic missile.

Wickremesinghe is expected to meet with President Droupadi Murmu, Prime Minister Narendra Modi and External Affairs Minister S Jaishankar during his visit to India. –

Updated: 20 Jul 2023, 05:21 PM IST