India and Sri Lanka share a unique and enduring relationship that spans over 2,500 years, rooted in strong civilizational and historical ties. Sri Lanka occupies a central position in India’s ‘Neighbourhood First’ policy and its broader vision of Security and Growth for All in the Region (SAGAR). The bilateral relationship has evolved into a well-established and multifaceted partnership, covering all key aspects of contemporary relevance. Sri Lankan President Anura Kumara Dissanayake chose India for his first overseas visit since taking office in 2024, reaffirming India’s strong commitment to its ‘Neighborhood First’ policy. During his meeting with Indian Prime Minister Narendra Modi, Dissanayake assured that Sri Lankan territory would not be used in ways inimical to India’s security. The joint statement emphasized continuity in bilateral ties, focusing on economic, agricultural, and digital cooperation. It also highlighted progress on the proposed Economic and Technological Cooperation Agreement and addressed ongoing challenges. Sri Lanka expressed continued cooperation with India to learn from India’s digital systems like Aadhaar, GeM, PM Gati Shakti, and digitalized customs and taxes, aiming to adopt similar systems in Sri Lanka.
One of the most significant ways India supported Sri Lanka was through a $4 billion line of credit extended in 2022. This credit facility enabled Sri Lanka to import essential goods, including food, medicines, and fuel, at a time when its foreign exchange reserves were nearly depleted. This timely intervention not only alleviated immediate shortages but also helped stabilize public sentiment during widespread protests and social unrest.
What is India’s ‘Neighbourhood First Policy’?
India’s strategic location in South Asia, bordered by countries such as Pakistan, China, Nepal, Bhutan, Bangladesh, Myanmar, and Sri Lanka, creates a foundation for a complex and dynamic network of relationships with its neighbours. This geographical positioning shapes India’s diplomatic, economic, and security engagements in the region. India’s ‘Neighbourhood First Policy’ (NFP), also referred to as the South Asian Foreign Policy (SAFP), centers on strengthening ties with neighbouring South Asian countries. This strategy focuses on enhancing peace and cooperation in the region, emphasizing trade, connectivity, and people-to-people exchanges with countries on India’s periphery. The Ministry of External Affairs (Economic Diplomacy Division) brief states, “India’s Neighbourhood First Policy rests on India’s prime responsibility to lift its neighbours to establish a rules-based order to preserve multilateralism and to establish peace and security in the Indian Ocean”. According to the Ministry of External Affairs India (MEA), the ‘Neighbourhood First’ policy originated in 2008. However, the ‘Neighbourhood First’ policy was formally introduced by Prime Minister Modi during his first term in 2014. This policy was showcased when Modi invited leaders from SAARC countries to his 2014 swearing-in ceremony. Under PM Modi, three main goals were established for the Neighbourhood First policy: Samvriddi (economic growth and development), Suraksha (national security), and Swabimaan (self-respect). With these objectives, India seeks to use its regional connections as a strategic advantage to expand its influence globally. Given India’s deep cultural and historical ties with its neighbours, the aim is to build on these relationships to achieve its broader goal of becoming a global leader or “Vishwaguru”. India’s leadership of the G20 marks a crucial point in its global influence. The country plays a significant role in addressing major international issues, including economic stagnation and regional conflicts.
India and Sri Lanka’s Evolving Partnership
India’s NFP and Sri Lanka’s “India First” approach have faced various complex challenges that have shaped their current relationship. After nearly 30 years of internal conflict in Sri Lanka, the country shifted its focus to economic recovery and adopted a more Asia-focused foreign policy. These changes led to a recalibration of India-Sri Lanka bilateral relations, highlighting their evolving partnership in the region. Sri Lanka holds significant importance for India due to several key factors. Strategically, its location in the Indian Ocean makes it vital to India’s security interests, serving as a hub for the movement of naval fleets between the Bay of Bengal and the Arabian Sea. Economically, Sri Lanka is one of India’s key trading partners, with bilateral trade reaching approximately USD 3.6 billion in 2020, positioning India as Sri Lanka’s second-largest trading partner. Since the implementation of the Indo-Sri Lanka Free Trade Agreement (ISLFTA) in 2000, Sri Lankan exports to India have grown significantly, accounting for over 60% of the country’s total exports to India in recent years. Sri Lanka plays a crucial role in India’s Indian Ocean strategy, helping India build partnerships and advance its goal of forming an Indian Ocean Rim Community. The geopolitical dynamics in the Indian Ocean Region (IOR) have added another layer of complexity, turning it into a strategic arena where regional and global powers vie for influence. These dynamics have reshaped India-Sri Lanka relations based on each country’s strategic outlook toward the IOR, impacting issues such as maritime security, regional peace, and stability. President Dissanayake’s visits to India highlighted the JVP’s new pragmatic stance, emphasizing trade, infrastructure development, and maritime security as areas of collaboration. Sri Lanka’s economic crisis further propelled this shift, as India extended significant financial support to stabilize the island nation.
Economic and Strategic Cooperation
In 2022, Sri Lanka granted provisional approval to Adani Green Energy for the development of two wind projects in Northwest Mannar and Pooneryn. In October 2023, Sri Lanka’s state-run dairy companies, managed by the National Livestock Development Board, formed a joint venture with India’s Amul Dairy. Moreover, discussions have been underway about involving India’s Adani Group in the management of Sri Lanka’s key international airports. In February 2024, Sri Lanka’s President Ranil Wickremesinghe virtually launched Phase-IV of the Indian Housing Project, ‘Bharat-Lanka’, aimed at building 10,000 homes for plantation sector workers in Sri Lanka with Indian grant assistance. The same month, India introduced its Unified Payment Interface in Sri Lanka, further enhancing financial connectivity between the two nations, alongside the approval of the Indian Rupee as a designated currency in 2023.
Security and Defense Cooperation
The growing defense cooperation between Sri Lanka and India is strategically significant for India, particularly as its defense engagements with other regional countries, such as the Maldives, are diminishing. This shift reflects India’s efforts to strengthen its influence in the Indian Ocean, especially as China’s presence in the region has surged. India has initiated capacity-building programs for Sri Lankan officers, offering training at premier defense institutions like the Central Detective Training Institutes and the National Security Guard. These programs, funded by India under the Indian Technical and Economic Cooperation (ITEC) and the “Aid to Sri Lanka” program, are free for Sri Lankan police officers. The training encompasses a wide array of subjects, including crime scene investigation, the use of artificial intelligence in combating cybercrime, and VIP security. In 2024 alone, over 130 Sri Lankan officers are expected to benefit from these courses. During the recent visit, President Disanayaka expressed satisfaction with the existing defence cooperation, including training programs, joint exercises, ship visits, and maritime surveillance. He thanked India for providing critical support, such as a Dornier Aircraft and establishing a Maritime Rescue and Coordination Centre, enhancing Sri Lanka’s maritime domain awareness. He also commended India’s swift humanitarian assistance and joint naval efforts to combat narcotics trafficking. To address security threats like terrorism, drug trafficking, and money laundering, both leaders agreed to strengthen collaboration in training, intelligence sharing, and capacity building. They resolved to explore a framework agreement on defence Cooperation, enhance hydrographic cooperation, provide defence platforms, and intensify joint exercises and maritime surveillance. Assistance in disaster mitigation, rehabilitation, and adaptive defence training programs was also pledged.
Conclusion
The evolving relationship between India and Sri Lanka under President Anura Kumara Dissanayake’s leadership marks a significant shift in South Asian diplomacy. Strengthening ties with Sri Lanka is crucial for India to reinforce its ‘Neighborhood First’ and SAGAR (Security and Growth for All in the Region) policies while addressing common security concerns such as maritime piracy, narcotics trafficking, and terrorism. The JVP’s newfound engagement with India, moving away from its historical opposition, highlights the potential for pragmatic diplomacy to overcome long-standing political differences.
