Trade and Investment

• India is among Sri Lanka’s largest trading partners within South Asia
• Bilateral trade crossed USD 5.5 billion, with India enjoying a trade surplus
• India remains a major source of Foreign Direct Investment, especially in infrastructure, energy, and services

Tourism and Digital Connectivity

• India is the largest source of tourists to Sri Lanka
• Adoption of UPI systems and use of Indian rupee for settlements strengthens fintech integration

Development and Humanitarian Support

• India has extended over USD 7 billion in credit and substantial grant assistance
• During Sri Lanka’s 2022 economic crisis, India acted as the first responder, providing food, fuel, medicines, and financial aid

Defence and Disaster Response

• Regular bilateral exercises such as SLINEX and MITRA SHAKTI
• India’s role in Humanitarian Assistance and Disaster Relief, including environmental emergencies

Cultural and Diaspora Linkages

• Presence of People of Indian Origin and Indian-origin Tamils
• Shared Buddhist and Hindu traditions, including sites like Jaya Sri Maha Bodhi

Strategic Importance of Each Other

Why Sri Lanka Matters to India

• Strategic location near critical Indian Ocean Sea Lanes and the Palk Strait
• Key partner in maritime security and countering extra-regional influence
• Central to India’s Neighbourhood First and MAHASAGAR strategy
• Acts as a geopolitical buffer against expanding Chinese presence

Why India Matters to Sri Lanka

• Crucial partner in economic stabilisation and recovery
• Largest regional source of trade, investment, tourism, and credit
• Reliable partner during crises, unlike transactional external powers

Major Challenges in India–Sri Lanka Relations

Chinese Strategic Presence

• Chinese infrastructure projects under the Belt and Road Initiative
• Long-term lease of Hambantota Port raises concerns of strategic encirclement
• Visits of Chinese surveillance vessels increase regional sensitivity

Fishermen and Maritime Disputes

• Recurrent arrests of Indian fishermen near Katchatheevu Island
• Differing interpretations of maritime boundary agreements
• Livelihood concerns of coastal communities, especially in Tamil Nadu

Ethnic and Political Issues

• Incomplete implementation of the 13th Constitutional Amendment
• Concerns over political rights and devolution in Tamil-majority regions
• Domestic political pressures in both countries complicate diplomacy

Internal Political Sensitivities

• Influence of regional politics in India, particularly Tamil Nadu
• Periodic use of anti-India narratives in Sri Lankan domestic politics

Way Forward for Strengthening Relations

Economic and Technological Cooperation

• Greater Indian investment in Sri Lanka’s IT and digital services sector
• Joint ventures in start-ups, fintech, and skill development

Sustainable Energy Partnership

• Expansion of cooperation in solar, wind, and green hydrogen projects
• Reducing Sri Lanka’s dependence on imported fossil fuels

Maritime and Security Coordination

• Strengthening mechanisms for joint patrolling and information sharing
• Permanent institutional dialogue on fishermen issues

People-Centric Engagement

• Expanding educational exchanges, cultural tourism, and religious circuits
• Supporting reconciliation and inclusive development without political interference