Talks on trade, power, China on Sri Lankan President’s visit to India

The visit is taking place at a time when Sri Lanka has been grappling with an economic crisis for a long time. According to the country’s central bank, inflation has remained high at 25.2% despite the cold winter since January. The International Monetary Fund (IMF) has estimated that Sri Lanka’s economy is expected to shrink by 3.1% in 2023. Millions of people have been plunged into poverty due to the country’s struggling economy. Wickremesinghe has spent most of his term in office pushing through painful economic reforms. His government has raised taxes, hiked interest rates and also fought to privatize state-owned banks and airlines.

India moved quickly to help stabilize Sri Lanka’s economy, providing nearly $4 billion in aid to the island nation. This included credit lines as well as currency exchange arrangements for the purchase of food and essential medicines. India also provided financial assurance to the IMF as it considered a $2.9 billion bailout for Sri Lanka, which was eventually approved in May 2023.

Economic matters could top the agenda on Wickremesinghe’s visit to Delhi. The two sides are expected to explore ways to increase trade through settlement in national currencies, among other proposals. Sri Lanka would also expect increased investment from India. The visit was led by Tata Sons Chairman N. Chandrasekaran who toured the country. Reports in the Sri Lankan media speculated that Tata may be eyeing Sri Lankan Airlines, one of the state-owned companies that Wickremesinghe’s government wanted to privatize.

The two countries are also likely to discuss an ambitious proposal to link their power grids. Mint reported in January that the two governments were in talks to establish a link for the transfer of power.

“Today India has a very strong power grid running across the country from north to south and east to west. In future, we would like to see the grid connected to neighboring countries including Myanmar, Sri Lanka and then expand that connection to South East Asian countries to emerge as an integrated market,” Ajay Tiwari, Additional Secretary, Ministry of Power in December 2022 he said.

China’s presence in the Indian Ocean is also likely to figure in the talks, given its importance to India. New Delhi is concerned about the presence of Chinese spy ships, especially the Yuan Wang-5, which stopped at the Hambantota port in August 2022 despite India’s objections. Yuan Wang-6, another research vessel, entered the Indian Ocean just as India planned a test launch of its nuclear-capable Agni-ballistic missile.

Wickremesinghe is expected to meet President Draupadi Murmu, Prime Minister Narendra Modi and External Affairs Minister S Jaishankar during his visit to India. ,

Updated: July 20, 2023, 05:21 PM IST