India and Sri Lanka Bilateral Relations

India and Sri Lanka further deepened their ties as Prime Minister Narendra Modi received a grand welcome in Colombo, becoming the first foreign leader hosted by the newly formed Dissanayake government.

Key Outcomes and Agreements Of The Visit

• Defence pact signed: Strengthens collaboration through the Colombo Security Conclave and enhanced security cooperation in the Indian Ocean Region.
• Assurance from Sri Lanka: Srilanka reaffirmed that its territory will not be used against India’s security interests, boosting regional stability.
• India-assisted railway modernisation projects: Maho-Omanthai line (128 km) refurbished with $91.27 million Indian assistance.
  • Advanced signalling system from Maho to Anuradhapura, funded by a $14.89 million Indian grant.
• Trincomalee Energy Hub Development: Multi-product pipeline and port energy infrastructure to be jointly developed.
  • Grid interconnectivity agreement signed, allowing electricity trade between India and Sri Lanka.
• Sampur Solar Power Project: Virtually inaugurated by both leaders, contributing to Sri Lanka’s clean energy goals.

• Debt restructuring agreement concluded between India and Sri Lanka: Over $100 million worth of Indian loans converted to grants.
• Interest rates reduced on Indian loans to ease Colombo’s repayment burden.
• Digital Identity Project: India provided ₹300 crore grant to support Sri Lanka’s Digital Identity Project.
• Special aid package for Eastern Sri Lanka: India to provide LKR 2.4 billion (~INR 66 crore) to support social and economic development in Eastern Provinces.
• Visit to Jaya Sri Maha Bodhi shrine in Anuradhapura: PM Modi and President Dissanayake jointly offered prayers at the sacred Mahabodhi tree, symbolising deep civilisational ties.
• Prime Minister Modi was awarded the Mitra Vibhushana: It is Sri Lanka’s highest civilian honour for a foreign head of state. 
• Conferred for India’s support through terror attacks (2019), COVID-19, and the economic crisis.
• Fishermen & Maritime Issues: Joint commitment to a humane approach on fishermen’s arrests and boat seizures. Sri Lanka requested India’s help to end bottom trawling, which causes irreversible ecological damage.

Significance of this Visit

• Sign of Priority: President Dissanayake chose India for his first foreign visit, and now Prime Minister Modi is the first foreign leader to visit Sri Lanka under Dissanayake’s presidency.
  • This signals mutual diplomatic priority and renewed commitment to regional closeness under India’s “Neighbourhood First” policy.
• Strengthening Bilateral Security: The 2025 Defence Memorandum of Understanding formalizes India-Sri Lanka security cooperation, representing a strategic move to enhance regional stability and counter growing Chinese influence in the Indian Ocean region.
• Strategic Reassurance to India: Sri Lanka’s commitment to ensuring that its territory and surrounding waters are not used against India’s interests directly alleviates India’s concerns over increasing Chinese maritime presence, particularly around the Hambantota Port.
• Recognition of India’s Support: Conferment of ‘Mitra Vibhushana award’ acknowledges India’s consistent support and cultural affinity.

Historical Ties Between India and Sri Lanka

• Ancient Cultural Links: The relationship dates back over 2,500 years, with Buddhism introduced to Sri Lanka by Emperor Ashoka’s son Mahinda in the 3rd century BCE, forming deep religious and cultural bonds.
• Chola Influence: South India’s Chola dynasty invaded Sri Lanka in the 10th century CE, leaving a lasting legacy in art, architecture, and language.
• Post-Colonial Cooperation: Both nations gained independence from British rule around the same time i.e. India in 1947 and Sri Lanka in 1948 and India aiding Sri Lanka in building democratic institutions.
• Ethnic Conflict and IPKF: India played a key role during Sri Lanka’s civil war, signing the 1987 India-Sri Lanka Accord to support Tamil rights through the 13th Amendment and deploying the Indian Peace Keeping Force (IPKF).
• Impact of Rajiv Gandhi’s Assassination: The assassination by the Liberation Tigers of Tamil Eelam (LTTE) in 1991 marked a turning point in India’s policy, leading to a more cautious approach.
• Post-War Phase: After the civil war ended in 2009, India has continued to support reconciliation and development in Sri Lanka.

Significance of Sri Lanka To India

• Strategic Geopolitical Location: Sri Lanka lies close to the southern tip of India in the Indian Ocean, making it a vital neighbor for India in ensuring regional security and stability.
  • It occupies a central place in India’s ‘Neighbourhood First’ policy and Security and growth for all in the region (S.A.G.A.R) vision.
• Maritime Security Partner: Located near key maritime chokepoints like the Palk Strait and Gulf of Mannar, Sri Lanka plays a crucial role in safeguarding India’s maritime interests and sea lanes.
• Cultural and Historical Bonds: India and Sri Lanka share centuries-old cultural, religious, and historical ties, strengthening diplomatic relations and fostering people-to-people connections.
• Energy Security and Connectivity: Sri Lanka is important for India’s energy strategy, offering opportunities for regional energy cooperation, including renewable energy initiatives and cross-border power links.
• Regional Influence in South Asia: As key players in South Asia, India and Sri Lanka’s cooperation can shape regional dynamics, promoting peace, stability, and development across the region.

Significance of India To Sri Lanka

• Development Assistance: In the 2024-25 fiscal year, India significantly increased its aid to Sri Lanka to ₹245 crore, a substantial rise from ₹60 crore in the previous year, reflecting strengthened bilateral ties.
• Tourism Growth: India remains the largest source of tourists to Sri Lanka. 
  • In the first half of 2024, nearly 200,000 Indian tourists visited, accounting for 18% of total arrivals. This surge significantly contributes to Sri Lanka’s tourism sector recovery.
• Relief During Sri Lanka Economic Crisis: India extended emergency financial support of about $4 billion, providing relief at a time when citizens struggled amid critical shortages of essentials.
• International Monetary Fund (IMF) bailout: India was among the first countries to provide financing assurances to the IMF, a prerequisite for the IMF’s $2.9 billion bailout package approved in 2023.
• Largest Global Trading Partner: India and Sri Lanka have a Free Trade Agreement (FTA) in place since March 2000, which significantly boosted bilateral trade. As a result, India has become Sri Lanka’s largest global trading partner, with trade volumes growing steadily over the years. 
• Others: 
  • Humanitarian Assistance and Disaster Relief (HADR): India consistently acts as a first responder during emergencies in Sri Lanka, extending timely humanitarian aid and disaster relief support.
  • Regional Security Cooperation: India supports Sri Lanka’s role in regional security through the Colombo Security Conclave, promoting collective maritime and regional security frameworks.
  • Maritime and Capacity Building Support: India aids capacity building in Sri Lanka, notably through projects like the installation of the Maritime Rescue Coordination Centre (MRCC), funded by an Indian grant.

Challenges in the India Sri Lanka Relations

• Fisheries Conflict: A long-standing dispute between Sri Lankan Tamil fishermen and Indian fishermen from Tamil Nadu, primarily due to the use of bottom-trawling by Indian boats, which harms marine ecosystems and threatens local livelihoods.
  • Although both countries agreed in 2016 to phase out bottom-trawling, Sri Lankan fishermen claim that Indian trawlers continue the practice, causing ecological damage and economic losses.
• Tamil Political Solution: Sri Lanka’s war-affected Tamil community hopes for India’s support in achieving a political settlement and holding long-delayed provincial council elections in the north and east.
• Debt Diplomacy: Sri Lanka’s reliance on Chinese loans for infrastructure projects like Hambantota Port has led to Chinese control of strategic assets, challenging India’s regional interests.
• Maritime Boundary Dispute: Katchatheevu is a small uninhabited island in Palk Strait, that connects the Bay of Bengal to the Arabian Sea.
  • It is a disputed territory between Sri Lanka and India, claimed until 1976 by India, and administered by Sri Lanka at the moment.
• India’s Support for the 13th Amendment in Sri Lanka: Following Sri Lanka’s civil war, India has consistently advocated for the full implementation of the 13th Amendment to ensure meaningful devolution of power, especially to the Northern and Eastern provinces.

Way Forward

• Regular Dialogue and Cooperation: India and Sri Lanka should continue to build their relationship through regular dialogue and cooperation, grounded in mutual respect, to ensure regional peace and prosperity.
• Broadening Outreach Beyond Ethnic Lines: India should adopt a broader approach that engages all communities and stakeholders in Sri Lanka to build stronger, more inclusive bilateral ties.
  • Allowing regional politics to dictate foreign engagement risks undermining India’s long-term strategic interests and ceding influence to external powers like China.
• Balancing China’s Growing Influence: India should proactively address China’s strategic footprint in Sri Lanka through transparent dialogue and by offering competitive, sustainable alternatives in areas like infrastructure, trade, and development.
• Providing Non-Reciprocal but Firm Support: India should continue offering non-reciprocal aid and support to Sri Lanka as a big brotherly gesture, but it must also ensure its goodwill is respected and that its strategic interests are safeguarded.
• Promote Tamil Reconciliation: Collaborate with Sri Lanka to expedite the devolution process and improve living standards for Tamils in the Northern Province.

Conclusion

India-Sri Lanka ties, guided by Neighborhood First and SAGAR (Security and Growth for All in the Region) policies, can deepen through inclusive dialogue and strategic cooperation for regional peace and prosperity.