NEW DELHI – Indian conglomerate Adani Group has signed an agreement worth more than $ 700 million to build a container terminal in the strategic port of Colombo, a move that observers say will give a boost to Sri Lanka’s struggling economy, where the growing Chinese presence is an issue of concern for Delhi.
The Indian company has reached an agreement with the state-run Sri Lanka Ports Authority (SLPA) and privately-held John Keells Holdings to jointly develop the West Container Terminal (WCT) in the port, according to a recent SLPA statement. He called the 35-year build-operate-transfer agreement “Sri Lanka’s biggest ever foreign investment in the port sector.”
This follows a decision by Sri Lanka earlier this year to drop, under pressure from unions, a 2019 MoU signed with the governments of India and Japan to develop and operate the Eastern Container Terminal (ECT ) in the port of Colombo. In response, India stressed the importance of adhering to international commitments.
“Opposing India is never a good option” for Sri Lanka, Harsh V. Pant, head of strategic studies at the New Delhi-based Observer Research Foundation, told Nikkei Asia, stressing that there had been a lot of negative reports in India after Colombo reneged on the ECT agreement. “There was clearly a feeling in India that India was unhappy with it.”
“If the Sri Lankans balance themselves [with the latest deal], it is good for Sri Lanka so that it can send a signal that it does not want to tip the scales in favor of one country or another, ”he said.
For India, Pant added, Sri Lanka is “a very important neighbor in the Indian Ocean … and New Delhi would be concerned if the Chinese presence becomes strategic” in the island nation.
India has often emphasized that its Indo-Pacific vision is that of a “free, open and inclusive” region, a euphemism often used to counter what it sees as China’s expansionist ambitions. Together with its Quad partners, Japan, Australia and the United States, it is committed to working to ensure peace and prosperity in the region.
China is already active in many infrastructure projects in Sri Lanka, including the Hambantota deepwater port, which was built with its help. In 2017, Sri Lanka, striving to repay over $ 8 billion in reported debt to China, signed an agreement granting a 99-year lease on a strategic southern port to a Chinese state-owned company.
“Sri Lanka’s economy is in bad shape,” said Nikkei Pankaj Jha, professor of defense and strategic studies at OP Jindal Global University, observing that Colombo wanted to reduce its import costs and export more, what she intends to do. by offering “lucrative” offers to Indian companies in exchange for better access to the Indian market.
“Colombo is trying to play a very strategic game, focused on business and enterprise, and which will also pave the way for India and Sri Lanka by reconnecting in a new way,” he added. .
Jha pointed out that the Chinese loan repayment phase has started for Sri Lanka and that if the island nation’s economy does not improve, it “will offer more projects on a plateau to China because they will not have no more other options, ”which is something India, too, will not be comfortable with.
“Now Sri Lanka is in a very vulnerable position,” he said. “If India does not engage with Sri Lanka as it wishes in New Delhi, Sri Lanka will return to China again for help and assistance,” he added.
The WCT deal was announced ahead of a visit to Sri Lanka by Indian Foreign Minister Harsh Vardhan Shringla from October 2-5. On the last day of his visit, Vardhan called on President Gotabaya Rajapaksa and “stressed the importance India attaches to rapidly advancing mutually beneficial projects, including proposals to improve air and maritime connectivity between the India and Sri Lanka ”, according to a statement from the Indian mission in Colombo.
The visit also coincided with the joint India-Sri Lanka military exercises at Ampara in the island nation which began on Monday and ran through October 15, which aim to promote close relations between the armies of the two countries and improve interoperability and share best practices. in counterinsurgency and counterterrorism operations.
“Now that the Indian Foreign Minister has visited Sri Lanka and this agreement with the WCT has been announced, there has certainly been an attempt to make it clear that India is truly part of the Sri Lankan landscape.” Pant said of the Observer Research Foundation. “But at the end of the day, each country plays a longer game – Sri Lanka has to keep India and China happy; China has to push and see how far they can go, and move India; and the India must make sure they are not out of the game. “
