India to expand investment in Sri Lanka’s energy sector, other core areas: Jaishankar By HIMAL KOTELAWALA

ECONOMYNEXT – India will encourage greater investments in Sri Lanka’s economy, particularly in energy, tourism and infrastructure development, India’s External Affairs Minister S Jaishankar said after his government pledged support for the crisit-hit island nation’s debt restructuring efforts.

Jaishankar, who is on a two-day official visit to Colombo, told reporters on Friday January 20 that India is counting on Sri Lankan authorities’ facilitating a more business-friendly environment, amid reports that the regional power is looking to cement its growing presence in Sri Lanka in a bid to counter decades of Chinese influence.

“India will encourage greater investments in the Sri Lankan economy, especially in the core areas like energy, tourism and infrastructure. We count on the Government of Sri Lanka to provide a more business-friendly environment to create a powerful pull factor. I am confident that the gravity of the situation is realised by policymakers here,” Jaishankar said.

Flanked by Sri Lanka President Ranil Wickremesinghe and Foreign Minister Ali Sabry, Jaishankar said at the press conference in Colombo that Sri Lanka is facing challenges in energy security and that a search for solutions must necessarily encompass the larger region.

India’s strategic interest in Sri Lanka’s energy sector, particularly in renewable energy, has been controversial.

“Only then will Sri Lanka get the full benefit of scale. This country has enormous renewable energy potential that can become a sustainable source of revenue. It has the capability as well for Trincomalee to emerge as an energy hub. In its support for Sri Lanka, India is prepared to be a reliable partner on such initiatives. We have today agreed in-principle on a renewable energy framework that would take this cooperation forward,” he said.

The two countries have been discussing the establishment of a refinery at the Trincomalee Port. Publicly traded Lanka IOC, a unit of Indian Oil Corporation and state-run Ceylon Petroleum Corporation own 49/51 percent stakes in Trinco Petroleum Terminal Ltd, which control 51 tanks in a World War Ii era tank farm by the Trincomallee Port.

The Indian foreign minister also called for strengthened connectivity between the two South Asian nations to promote travel as a high priority.

“Definitely, encouraging Indian tourists to make RuPay payments and utilize UPI would be most helpful in this regard.

“In a turbulent world, it is essential that India and Sri Lanka steady their trade. The use of rupee settlement for trade is obviously in our mutual interest,” he said.

Commenting on the Indian finance ministry’s letter to the IMF on Sri Lanka, Jaishankar said India felt strongly that Sri Lanka’s creditors must take proactive steps to facilitate its recovery.

“India decided not to wait on others but to do what we believe is right. We extended financing assurances to the International Monetary Fund (IMF) to clear the way for Sri Lanka to move forward.

“Our expectation is that this will not only strengthen Sri Lanka’s position but ensure that all bilateral creditors are dealt with equally,” he said.

Ahead of Jaishankar’s visit, the Indian government informed the IMF that it strongly supports Sri Lanka’s debt restructuring efforts in the latter’s bid to secure a 2.9 billion dollar bailout package over a four-year period.

Colombo owes New Delhi roughly 1.5 billion US dollars, not counting central bank swaps. In 2022, India provided some 4 billion dollars in assistance during the currency crisis, the worst in decades.