Despite deep ties, India’s relations with Sri Lanka have seen strains due to China’s growing influence in Sri Lanka through investments and economic dominance. Analyse. (2024, 10 Marks)
India and Sri Lanka share Buddhist heritage, Tamil kinship and a 1987 Accord whose exchange of letters barred foreign military use of Sri Lankan ports prejudicial to India. China’s rise as financier after 2005 has strained this relationship. Yet the strain comes less from Chinese economic dominance, which is overstated, than from the security uses Chinese assets could serve.
Sources of strain
- Ports: Hambantota, opened in 2010 with Chinese loans, was leased in 2017 for 99 years to a Chinese state firm, which paid US$1.12 billion for a 70% stake. Colombo Port City, launched during Xi Jinping’s 2014 visit, is a reclaimed financial zone with its own legal regime beside India’s busiest transhipment route.
- Naval and survey visits: Chinese submarine calls at Colombo (2014), then the Yuan Wang 5 (2022) and Shi Yan 6 (2023), turned commercial projects into security questions. The 2024 moratorium lapsed, and by mid-2025 the promised operating procedure for research ships was still unfinished.
- Elite capture: in the Rajapaksa years, unviable projects were pushed through for domestic political reasons, several in the ruling family’s home district of Hambantota.
- Colombo’s counterweight reflex: when India presses the Tamil question, Sri Lanka reaches for an outside patron.
Why “economic dominance” is overstated
- Colombo first offered Hambantota to India, which declined it as unviable.
- Hambantota was not a debt-for-equity swap: the China Exim loans stayed on their original terms, and the lease money went to reserves.
- Chinese lending was only about a tenth of Sri Lanka’s external debt; international sovereign bonds were the bigger burden.
- Darren J. Lim and Rohan Mukherjee (Asian Security, 2019) find Beijing’s money bought little strategic influence, blunted by poor projects, local politics and Colombo’s ties with India.
How 2022 shifted the balance
- India’s roughly US$4 billion in credit, swaps and fuel made it the largest lender in the crisis year; it then co-chaired the Official Creditor Committee with Japan and France.
- Anura Kumara Dissanayake’s government signed the first India–Sri Lanka defence MoU (April 2025) and a Trincomalee energy hub with the UAE, while accepting a US$3.7 billion Sinopec refinery at Hambantota.
- After Cyclone Ditwah (November 2025), India acted as first responder; in August 2026 Foreign Secretary Vikram Misri’s visit brought US$350 million in rupee credit and agreement to resume talks on an economic and technology pact.
Conclusion
China strains the relationship mainly as a security variable, not as an economic hegemon. Sri Lanka hedges, and India cannot demand exclusivity. Its leverage lies in crisis finance, deeper trade and energy interdependence, and firm assurances on port use.