1. Strategic Context and Recent Engagements

• Prime Minister Narendra Modi’s visit to Sri Lanka in April 2025 marks a renewed momentum in bilateral relations.
• The visit follows his participation in the BIMSTEC summit in Thailand, underlining India’s regional outreach.
• This is the first major visit since the election of the National People’s Power (NPP) government in Sri Lanka, which has shown greater sympathy towards India and less alignment with pro-China stances of previous governments.

2. Areas of Cooperation and Signed Agreements

• Several MoUs (Memoranda of Understanding) are expected to be signed covering:
  • Energy cooperation
  • Development of Trilateral Infrastructure Projects (India, Sri Lanka, and UAE)
  • Defence technology sharing
  • Digital transformation and cyber collaboration
  • Health sector support
  • Development projects in Eastern Province
  • Debt restructuring
• Focus also on reopening of Adani Group’s Colombo energy project, a major indicator of restored trust and investment confidence.

3. Free Trade Agreement (FTA) and Economic Ties

• Razeen Sally, a senior economist and adviser to Sri Lanka’s former PM, emphasized the need to finalise a stronger FTA between India and Sri Lanka.
• The proposed FTA aims to:
  • Cover services, not just goods.
  • Enable free movement of professionals.
  • Overcome protectionist blockages in both countries.
• Sally noted that a favourable climate exists now for India to act, especially with the NPP in power.
• FTA could anchor Sri Lanka in India’s economic orbit, moving away from long-standing Chinese influence.

4. India’s Strategic Leverage

• India must use this “window of opportunity” to:
  • Counterbalance Chinese presence in Sri Lanka.
  • Cement regional supply chains and infrastructure links.
  • Promote Make in India via regional trade routes and energy corridors.
• India’s support in rail, road and digital infrastructure—e.g., the inauguration of the Anuradhapura Railway Station Signal System—reflects long-term engagement.

5. Cultural and People-to-People Ties

• PM Modi will participate in religious and cultural events:
  • Visit to Mahabodhi Temple in Anuradhapura (a key Buddhist site).
  • Shared Buddhist heritage is a pillar of India’s soft power in the region.
• Cultural diplomacy is expected to complement trade and political dialogue.

6. Investment Climate and Political Reception

• The current government is open to Indian investments, especially in infrastructure and energy.
• Political emphasis on inclusive growth and opposition to excessive Chinese dependency signals new openness.
• However, challenges persist:
  • Rising economic nationalism and local sensitivities about sovereignty.
  • Past accusations against India regarding “economic dominance” still echo among some factions.

7. Economic Situation in Sri Lanka

• Sri Lanka, under IMF reforms, is trying to revive economic growth after a prolonged crisis.
• FDIs are still low, and political risk remains high.
• India, through bilateral support and technology transfers, can help Sri Lanka stabilise and grow.

8. Geopolitical Considerations

• Strategic location of Sri Lanka in the Indian Ocean makes it vital for India to retain influence.
• FM Wijitha Herath reiterated that Sri Lanka wants balanced ties with India, China, US, and Russia.
• Emphasis that Sri Lanka is not under pressure from India or China but needs to maintain sovereignty.

9. Way Forward

• Finalise and implement a comprehensive FTA, covering goods, services, and digital trade.
• Enhance bilateral infrastructure and energy partnerships.
• Use cultural diplomacy and shared Buddhist heritage as a tool of engagement.
• Focus on capacity building, investment facilitation, and regional peace initiatives.
• Continue to offer financial support, humanitarian aid, and climate resilience cooperation.

Conclusion

India and Sri Lanka are at a critical juncture. With political alignment, cultural bonding, and strategic cooperation at a high point, both sides must now work on institutionalising economic integration, boosting people-to-people ties, and managing geopolitical sensitivities wisely.