Date : 11/12/2023

Relevance: GS Paper 2- International Relations - Bilateral Relations

Keywords: Tamil Ethnic Concern, Palk Strait, Hambantota Port, India-Sri Lanka Free Trade Agreement, Buddhism

Context-

The recent announcement by Sri Lanka's President Ranil Wickremesinghe regarding the proposal for land connectivity with India marks a pivotal moment in the two countries' relationship. This proposal, initially raised two decades ago, aims to build a bridge linking Rameswaram in Tamil Nadu with Talaimanar in Sri Lanka's Northern Province, fostering regional economic integration. Despite periodic opposition from certain quarters, both leaders have displayed resilience in pursuing this vision.

Land Connectivity:

President Wickremesinghe's vision of regional economic integration has manifested in the proposal for land connectivity. The idea of the bridge project, estimated at ₹24,000 crore, faced criticism but survived. In a joint statement in July, both leaders emphasized conducting a feasibility study for enhanced connectivity. Sri Lanka's Finance Minister, also the Prime Minister, highlighted the project in the Budget address, emphasizing the strategic utilization of Colombo and Trincomalee ports for supply needs in India's southwest and southeast regions.

Power Grid Collaboration:

While the proposal for land connectivity is gaining momentum, the collaboration in the power sector has faced significant delays. Since the signing of a memorandum of understanding in 1970 to connect the electricity networks of the two countries, no electricity has been transmitted. In contrast, India has been exporting significant energy to Bangladesh annually. The slow progress of the transmission network project, involving the transfer of 1,000 MW, underscores the need for expeditious collaboration in the energy sector.

Trade Relations:

The India-Sri Lanka Free Trade Agreement, signed in 1998, has not seen substantial progress despite ongoing talks for an economic and technology cooperation agreement. Bilateral economic ties have shown promise, with India regaining its position as the largest source of imports for Sri Lanka. However, the underperformance in comparison to India's trade with Bangladesh raises concerns. Sri Lanka should prioritize negotiations and foster an environment conducive to mutually beneficial economic relationships.

Energy Sector Challenges:

Despite ongoing projects in the renewable energy sector, challenges persist in realizing the full potential of energy collaboration. The transmission network project, aiming for a High Voltage Direct Current overhead link between Madurai and New Habarana, needs accelerated progress. Timely completion of this project could have mitigated Sri Lanka's power shortages in 2022 and positioned the country to export cheaper power to India by 2030.

Trade Agreement and Economic Cooperation:

The slow progress in economic cooperation agreements and technology collaboration is a roadblock in the comprehensive development of India-Sri Lanka relations. While bilateral economic ties have seen improvement, negotiations for enhanced economic cooperation have faced setbacks. Sri Lanka's recent economic growth has not translated into substantial trade benefits with India, emphasizing the need for renewed efforts in fostering economic collaboration.

Comparative Analysis with Bangladesh:

A comparative analysis of India's trade relations with Sri Lanka and Bangladesh reveals a significant disparity. While Sri Lanka's bilateral trade with India in 2021 stood at $5.45 billion, Bangladesh's trade reached $18.14 billion. The economic growth of Bangladesh in recent years highlights the potential for Sri Lanka to enhance its economic ties with India, emphasizing the need for proactive measures.

The Way Forward:

Sri Lanka, known for its smooth transition of power, should not be hindered by historical challenges. Learning from Bangladesh's example, Sri Lanka can overcome nationalist sentiments in the political class to establish a mutually beneficial economic relationship. Recent positive developments, such as the resumption of air services and joint ventures in the dairy sector, should serve as a foundation for sustained and improved bilateral ties.

Conclusion

In conclusion, the relationship between India and Sri Lanka holds immense potential in the areas of infrastructure development, energy collaboration, and trade. The proposed land connectivity project and the unresolved challenges in the power and trade sectors underscore the need for both countries to reinvigorate their commitment to comprehensive collaboration. By addressing existing challenges, leveraging recent positive developments, and learning from successful partnerships in the region, India and Sri Lanka can forge a path towards a more integrated and mutually beneficial relationship.

Source- The Hindu