India-Sri Lanka Relations : Economic, Cultural and Defence | UPSC Notes

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India-Sri Lanka Relations : Economic, Cultural and Defence | UPSC Notes

Sri Lanka is one of the countries that India is close to. India has a special place in its heart for Sri Lanka because the two countries have been close since almost the beginning of written history in the subcontinent. India and Sri Lanka have been friends for over 2,500 years, and both countries have built on a long history of educational, cultural, religious, and linguistic exchange. In recent years, the relationship has been marked by close contacts at the highest political level, rising trade and investment, cooperation in the areas of development, education, culture, and defence, and a broad understanding of major international issues.

Over the past year, the two countries have had a lot of different kinds of exchanges and made a lot of progress on projects to help the Internally Displaced Persons (IDPs) and other poor people in Sri Lanka. This has helped strengthen the friendship between the two countries.

In May 2009, the nearly 30-year war between Sri Lankan troops and the Liberation Tigers of Tamil Eelam (LTTE) ended. During the war, India backed Sri Lanka’s government’s right to take action against terrorist groups. At the same time, it told the highest levels of government how worried it was about the situation of the mostly Tamil civilian people and how their rights and welfare shouldn’t be mixed up with the fighting against the LTTE.

India has said over and over that the ethnic problem needs to be solved politically so that there can be national healing. India has always supported a negotiated political solution that is acceptable to all groups within the context of a united Sri Lanka and is in line with democracy, diversity, and respect for human rights.

Relationships in the past

Relations before independence

• The first time Sri Lanka was talked about was during the time of the Ramayana. Ravana held Sita hostage in Lanka, but Ram and Hanuman were able to save him.

• The ties go back to the time when Buddhism began to spread. Around 2000 years ago, Buddhism as a movement spread to Sri Lanka.

• The north and north-east of Sri Lanka are now part of India economically.

• The people who lived in Sri Lanka (then called Ceylon) before the British colonised it were not part of the British India Empire. Instead, they were run by a different government.

• Beginning in the 1830s, the British brought slaves from India, especially Tamil Nadu, to Ceylon. The British took the Tamils and moved them to the northern part of Ceylon.

Relations After Independence

• India got its own government in 1947, and Ceylon did the same in 1948.

• After Ceylon got its independence, the Sinhalese government treated Tamils badly, which made things worse between India and Ceylon.

• Ceylon came up with a way to make it hard for Tamils to become citizens of the country. They also wanted to make sure that Tamil people didn’t take over state services. Because they didn’t speak Sinhalese, they made it hard for Tamil officials to do their jobs.

• However, in 1964, the Shastri–Sirimavo deal was signed. Under this agreement, Ceylon agreed to give three lakh Indian Tamils in Ceylon citizenship, and India agreed to send a large number of these people back to India. But the issue of return was not resolved until 1988.

• After the Indo-Pak war of 1971, India moved closer to the USSR, while Sri Lanka slowly moved closer to the US.

• Jayewardene pushed for a free and open economy and moved Sri Lanka towards the west.

• The situation got worse because of riots between Tamils in 1977 and 1981.

• After 1980, India changed its strategy to be very careful. Scholars and theorists often say that the Research and Analysis Wing (R&AW) was used by India to teach Tamil rebels in Sri Lanka. The goal was to use Tamil rebels to make Jayewardene’s government unstable and to stop the Tamil rebels from making a new country.

• V Prabhakaran started the separatist and insurgent armed group Liberation of Tamil Tigers Eelam (LTTE) in 1976.

• As the R&AW slowly succeeded in making the Sri Lankan government unstable, it stopped giving money to the rebels.

• But by this time, the LTTE had grown into a strong group and started to claim that it was the only voice for Tamils in Sri Lanka.

• After Indira Gandhi died, Jayewardene asked Pakistan and the US for help in training Sri Lankan troops to fight the LTTE rebels.

• In 1987, Jayewardene asked India in writing to stop the LTTE from using force in Sri Lanka, but India didn’t do anything.

• The India–Sri Lanka Accord (ISLA) was signed on July 29, 1987. This gave Tamil areas a certain amount of freedom.

• Sinhalese started to see India’s role as an unwanted intrusion into Sinhalese internal matters that wasn’t good for Sri Lanka.

• V.P. Singh won the Indian elections in November 1989, and the IPKF mission finished in March 1990. They were sent back to India. Rajiv Gandhi was killed by the LTTE in 1991, and the group was then labelled a terrorist group.

• When Rajiv Gandhi died, many Tamil groups also stopped helping the LTTE. As India came to understand that its mission had failed, it also felt the need to take a fresh look at its strategy towards Sri Lanka.

Relations After the Cold War

• When the Cold War ended, India opened up its economy and got a new chance to build relationships with other countries.

• This did change how we thought about Sri Lanka. Even Kumaratunga and Wickremesinghe, the leaders of Sri Lanka after them, took steps to make things better.

• A trade deal between India and Sri Lanka was made in 1998.

• From 2000 to 2003, India tried to get Sri Lanka and the LTTE to talk and stop fighting, but it didn’t take part in the process officially.

• Rajapaksa became President in November 2005. From 2005 to 2006, there were problems in Lanka. From 2006 to 2009, Rajapaksa’s government increased the armed response and started Eelam War–IV.

• In 2007, Prabhakaran, the LTTE’s most important boss, was killed. By May 2009, the LTTE had been completely wiped out.

• While India stayed out of the Eelam War IV, Sri Lanka got closer to Pakistan and China.

• During the time after the LTTE, India became more worried as Pakistani planes helped train and decorate Sri Lanka. China also gave arms and a lot of money to help with the economy. China was given access to the Hambantota port, which India had turned down before, saying it would be too expensive.

• This has made Indians more afraid because a link between civilians and the military in Sri Lanka could put Indian security at risk.

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• Right now, India’s main goal is to stop Pakistan and China from using Sri Lanka against India.

Sri Lanka’s importance in world politics

• Sri Lanka, which is at the southern tip of peninsular India, is important for India in every way from a military point of view.

• Britain knew that Sri Lanka was important for the safety of both British India and the Indian Ocean, so they built a large naval base at Trincomolee on the island’s eastern side.

• This island country is in the middle of the main sea routes from Europe to East Asia and the oil ship routes from the countries that make oil in the Gulf to China, Japan, and other Pacific countries.

• It is important to the US military because these sea routes are used to move navy power from the Pacific Ocean to the Indian Ocean and the Gulf.

• The British Defence and External Affairs Agreement of 1948 and the Maritime Agreement with the USSR of 1962 show that the West is interested in Sri Lanka’s strategic position.

• Even when J.R. Jayewardene and Ranasinghe Premadasa were in charge, from 1978 to 1989 and 1989 to 1993, respectively, Sri Lanka was chosen to build the Voice of America transmitting station, which was thought to be used for spying on the Indian Ocean and gathering information.

• The most controversial thing in recent years was how much China was involved when Rajapaksa was in power.

• China is building huge, modern ports in Gwadar, Pakistan, Chittagong, Bangladesh, Kyauk Phru, Myanmar, and Hambantota, Sri Lanka, all along the Indian Ocean to the south.

• The goal of China’s “string of pearls” plan is to surround India and become the most powerful country in the Indian Ocean.

• After 2015, Sri Lanka still depends on China a lot for the Port City project and for the continuation of building projects in Sri Lanka that China has paid for.

• Even though it is said that the Hambantota harbour is losing money, its position makes it a good place for growth.

• Sri Lanka has a list of very important ports that are in some of the busiest sea lanes. Sri Lanka’s Colombo Port is the world’s 25th biggest container port, and Trincomalee’s natural deep water harbour is the world’s fifth largest.

During World War II, the main base for the British Royal Navy and the Eastern Fleet was in the port city of Trincomalee. So, Sri Lanka’s position can be used for business and industry, as well as a military base.

• India also has a very important security interest in Sri Lanka from a strategic point of view. India’s plans would be thrown off if Sri Lanka was not friendly. Sri Lanka is also important to India from a strategic point of view in terms of her Indian Ocean policy and her plans to build an Indian Ocean Rim Community.

• It is important for the Indian Navy because naval forces have to go around Sri Lanka to move from the Bay of Bengal to the Arabian Sea and back again.


Areas where India and Sri Lanka can work together


• The political ties between the two countries have been marked by regular trips from high-level officials.

• In the past, there have been a lot of problems between the two countries. In the 1980s, the Tamil question was the most important issue between the two countries. More recently, there have been some disagreements over poaching by fishermen and Sri Lanka’s growing need for funding from China.

• In February 2015 and May 2016, President Maithripala Sirisena went to India for work. He went to New Delhi, Ujjain, and Sanchi while he was there. On October 15–17, 2016, President Maithripala Sirisena also went to India to take part in the BRICS–BIMSTEC Outreach Summit.

• In September 2015, Prime Minister Ranil Wickremesinghe went to India. It was his first trip outside of Sri Lanka since becoming Prime Minister. The last time PM Ranil Wickremesinghe went to India was from October 18 to 20, 2018.

• In June 2019, the Indian Prime Minister will go to Sri Lanka for the first time outside of India during his second term. This is a big sign of the special relationship between the two countries.

• Sri Lanka is part of regional groups like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and the South Asian Association for Regional Cooperation (SAARC), where India is the leader.

• India has recently asked the leaders of BIMSTEC partner countries to come to the swearing-in ceremony for Prime Minister Narendra Modi and his cabinet. This fits with the government’s strategy of putting the needs of the neighbourhood first.

• Sri Lanka has been part of India’s political circle for a long time, but its ties to China have grown stronger in recent years.

• Former President Rajapaksa brought Sri Lanka closer to China and ignored Indian worries, such as how to help Tamil people who had to leave their homes because of the long-running civil war in Sri Lanka.


• India’s biggest trading partner in SAARC is Sri Lanka, and India is Sri Lanka’s biggest trading partner in the world.

• Trade between India and Sri Lanka grew quickly after the India-Sri Lanka Free Trade Agreement went into effect in March 2000.

• India is one of the top four investors in Sri Lanka. Since 2003, India has put more than US$1 billion into the country. The investments are in many different areas, such as retail petrol, IT, financial services, real estate, telecommunications, hospitality and tourism, banking, food processing (tea and fruit juices), metal industries, tyre, cement and glass manufacturing, as well as infrastructure development (railway, power and water supply).

• India is also one of the biggest investors in Sri Lanka through Foreign Direct Investment. Several big companies from India have put money into Sri Lanka and set up shop there.

• According to BoI, the amount of FDI from India was about US$ 1.7 billion from 2005 to 2019.

• Trade between the two countries was worth $4.38 billion in 2016. In 2016, India sent $3.83 billion worth of goods to Sri Lanka. Sri Lanka sent $551 million worth of goods to India.

• In 2020, India was Sri Lanka’s second biggest trading partner, with about $3.6 billion worth of goods traded between the two countries.

• Since ISLFTA went into effect in 2000, Sri Lankan exports to India have grown a lot, and more than 60% of Sri Lanka’s total exports to India over the past few years have taken advantage of ISFTA’s benefits.

• It’s interesting that only about 5% of India’s exports to Sri Lanka in the past few years have used the ISFTA rules. This shows how competitive India is in the Sri Lankan market as a whole.

Developmental Cooperation

Sri Lanka is one of India’s most important development partners, and this relationship has been a key part of their relationship with Sri Lanka for many years. The total pledge by GOI is worth more than USD 3.5 billion. The grants alone are worth about USD 570 million. India’s development projects cover almost every important part of the economy, such as housing, roads, education, health, agriculture, fisheries, industry, handicrafts, culture, sports, and tourism.

The Indian government has set up a strong plan to help Internally Displaced Persons (people affected by the LTTE war and Tamils who had to leave their homes because of a humanitarian crisis) get back to normal life as soon as possible. India’s economic aid has been stepped up mainly because of promises made by the President of Sri Lanka when he visited India in June 2010. These things were:

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• Building 50,000 units of homes,

• Fixing up the Northern Railway tracks,

• Wreck-removal,

• Setting up centres for vocational training,

• Building a cultural centre in Jaffna and fixing up the Thiruketheeswaram Temple.

• Creating an Agricultural Research Institute in the Northern Province,

• Increasing the number of scholarships for Sri Lankan kids who want to go to college in India;

• Creating English language training centres and helping with the National Action Plan for a trilingual Sri Lanka.

• The Housing Project is the main way that the Indian government helps Sri Lanka. It will give funds totaling more than INR 1372 crore. Sri Lanka is one of the countries that gets the most development loans from the Indian government. The Indian government has given Sri Lanka a total of $2.63 billion in loans and handouts, totaling $458 million.

• India still gives grants to a lot of smaller development projects in areas like education, health, transportation, small and medium business growth, and training in many parts of the country.

India and Japan can build a new port for shipping containers.

• Sri Lanka’s government said it will let India and Japan build a new container terminal at the country’s main port. This comes after they broke a deal with India and Japan to build one of the most important terminals at the same port.

• After weeks of protests by trade unions and opposition parties, Sri Lanka stopped the deal for India and Japan to build and run the important East Container Terminal at Colombo Port in 2019.

• India picked Adani ports, which was previously chosen to invest in the East Container Terminal. Which will be run for 35 years under a plan called “build, operate, and transfer.”

China’s angle to the move

• India thinks of the area around the Indian Ocean as its strategic backyard. It is worried about China’s growing economic and political power over nearby Sri Lanka, which it sees as a rival.

• China sees Sri Lanka as a key part of its “Belt and Road” plan to build infrastructure around the world, and it has given Sri Lanka billions of dollars in loans for projects over the past 10 years. There will be a seaport, airport, port city, highways, and power plants built as part of the projects.

• China and the Ports Authority already work together to run the Colombo International Container Terminal.

• Critics say that the projects that China is paying for are not financially sound and that Sri Lanka will have a hard time paying back the loans.

• In 2017, Sri Lanka gave a Chinese business a 99-year lease on a port that was built with a loan from China. The port is near busy shipping routes and was built by the Chinese.

• Japan and India are part of Quad, a group of countries in the Indo-Pacific that also includes the US and Australia and wants to counteract the impact of China in the area.

Cooperation on Defence and Security

• Sri Lanka and New Delhi have worked together to keep people safe for a long time. In recent years, the two sides’ armed forces have been working together more and more.

• India and Sri Lanka do a military drill called “Mitra Shakti” and a naval exercise called “SLINEX” together.

• India also trains the Sri Lankan military in defence.

• India, Sri Lanka, and the Maldives signed a trilateral marine security cooperation agreement to improve surveillance, fight piracy, and clean up the ocean in the Indian Ocean Region.

• In April 2019, India and Sri Lanka signed a deal to stop the trade of drugs and people.

• After the terrible Easter blasts, the Prime Minister of Sri Lanka thanked the Indian government for all the “help” it had given.

 Before the attacks, Indian agencies sent out warnings that said radicalised suicide bombers would be used to attack churches and the Indian High Commission in Colombo.The Colombo Security Conclave is an Indian Ocean maritime security group made up of India, Sri Lanka, and the Maldives. It was started in 2011.


• The Cultural Cooperation Agreement, which was signed by the governments of India and Sri Lanka on November 29, 1977 in New Delhi, is the basis for the countries’ regular Cultural Exchange Programmes. The Indian Cultural Centre in Colombo actively raises awareness of Indian culture by giving classes in Indian music, dance, Hindi, and Yoga.Cultural groups from both countries visit each other every year. The Prime Minister made a statement about the Festival of India in Sri Lanka while he was there. It started in November 2015 with “Nrityarupa,” a dance medley from different parts of India that was shown in Colombo, Kandy, and Galle. The Festival’s theme was “Sangam,” which means a meeting of Indian and Sri Lankan cultures.The India-Sri Lanka Foundation was set up in December 1998 as a joint effort between the two governments. Its goals include improving scientific, technical, educational, and cultural cooperation through exchanges between civil society groups and bringing more young people from the two countries together. India now gives about 290 scholarships to Sri Lankan students every year. Under the Indian Technical and Economic Cooperation Scheme and the Colombo Plan, India gives Sri Lankans another 370 places every year.

People to People Contact

People of Indian Origin (PIOs) include Sindhis, Borahs, Gujaratis, Memons, Parsis, Malayalis, and Telugu speakers who have moved to Sri Lanka (most of them after split) and started businesses there. Even though there aren’t as many of them (about 10,000) as there are Indian Origin Tamils (IOTs), they are economically well off and in good positions. Each of these places has its own group that plans festivals and other culture events.

Areas where India and Sri Lanka can work together to help each other:

• In the energy sector, India and Sri Lanka have decided to work together to reopen an oil storage facility from World War II in a port town in the eastern part of the country that is in a good location and build infrastructure around it.

• There are a lot of possibilities for private investments in both countries. The main areas where the two countries work together are oil, IT, financial services, real estate, telecommunications, healthcare, tourism, banking, food processing, and so on.

• Sri Lankan tourists who want to visit India can get a special package deal from the Indian railroad. India has also started giving Sri Lankans e-visas.

• India wants Sri Lanka to sign the Economic and Technical Cooperation Agreement (ETCA), a new trade deal, so that it can get closer to Sri Lanka. It will take the place of the CEPA and set up a deal for trading services and sharing technologies. ETCA will raise the quality of goods and services, making them more competitive on the global market and giving people more chances to train and develop their skills.

Sri Lanka is important to India because:

Sri Lanka is India’s closest maritime neighbour and is strategically located between the Indian Ocean and the Bay of Bengal. According to its “Neighbourhood-First Policy” and the “SAGAR (Security and Growth for All in the Region) Doctrine,” India places a lot of importance on Sri Lanka “to keep the Indian Ocean region safe and peaceful.”

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• 70% of Indian goods goes through the Colombo port, which is the largest port in South Asia for changing ships.


Major issues b/w India-Sri Lanka

Fishermen & Katchatheevu Island Issue:

Even though India and Sri Lanka made a deal 47 years ago, they still can’t settle a maritime conflict. Despite the 1974 Indo-Lanka Maritime Boundary Agreement, Indian fishermen often cross the maritime border into Sri Lanka in the Palk Strait. This causes the Sri Lankan Navy to attack the Indian fishermen. Sri Lankan naval troops killed the fishermen by beating them to death.

• Since the territorial seas of both countries are close to each other, especially in the Palk Straits and the Gulf of Mannar, fishermen often get lost.

• Indian boats have been fishing in the troubled seas for hundreds of years. They had free reign over the Bay of Bengal, Palk Bay, and the Gulf of Mannar until 1974 and 1976, when treaties were signed between India and Sri Lanka to set the International Maritime Boundary Line (IMBL).

• However, the treaties didn’t take into account how hard it was for thousands of traditional fishers who had to limit their fishing trips to a small area.

The small island of Katchatheevu, which they had been using to sort their catch and dry their nets, fell on the other side of the IMBL.Fishermen often risk their lives and cross the IMBL so they don’t have to go home empty-handed. However, the Sri Lankan Navy is on the lookout and has arrested or destroyed fishing nets and boats of those who have crossed the line.With these plans in place, the problem of keeping sailors in jail has been dealt with in a humane way.India and Sri Lanka have agreed to set up a Joint Working Group (JWG) on Fisheries between the Ministry of Agriculture and Farmers Welfare of India and the Ministry of Fisheries and Aquatic Resources Development of Sri Lanka to help find a permanent answer to the fishermen problem.

Katchatheevu Island:

Kachchatheevu is a small island about 10 miles north-east of Rameshwaram. India and Sri Lanka set their international marine boundary line (IMBL) in 1974. At that time, India gave Sri Lanka the island of Katchatheevu.

• Indian sailors keep getting caught fishing off of Katchatheevu because they think it’s a “traditional” place to fish. But both the sailors and the Navy of Sri Lanka disagree with this. To solve the problem, the two countries have come up with a plan (the Joint Working Group) for how to deal with fishers.

Political Turmoil:

• On October 25, 2018, President Maithripala Sirisena fired Prime Minister Ranil Wickramasinghe and replaced him with the country’s previous president, Mahinda Rajapaksa. New Delhi’s response to this crisis was to ask that the constitutional process be followed and to offer Sri Lanka help with its growth. On the other hand, the Chinese minister in Colombo congratulated Rajapaksa very quickly.

How China influence Sri Lanka:

• China has been investing a lot of money in Sri Lanka. India is worried about China’s growing power in the country and in the area around the Indian Ocean. The Colombo City Project, Hambantota Port, and the anchoring of Chinese warships and submarines are all things that cause this worry.

• A few years ago, Sri Lanka could no longer pay back the debt it owed to China. As a result, Beijing put pressure on Sri Lanka to give China full control of the new port. In December 2017, China got a controlling stake in Hambantota port and a 99-year lease on it. • According to the Central Bank of Sri Lanka’s yearly report for 2018, 18.5% of Sri Lanka’s imports came from China. This was just a little less than the 19% that came from India.

Tamil Issue:

India has pushed for a real devolution package based on the 13th Amendment. This has to do with the Tamil issue. India is interested not only because of its culture, but also because it is home to about 1 million Tamil refugees. Sri Lanka’s refugees won’t be able to go back until there is peace on the political front.

Peace Accord:

The Indo-Sri Lanka Peace Accord was signed in 1987 by Indian Prime Minister Rajiv Gandhi and Sri Lankan President J. R. Jayewardene to end the civil war. Under the terms of the deal, Colombo had to give power to the provinces so that the provinces, including those in the north, could have more freedom. The LTTE, on the other hand, had to give up their weapons. The 13th change to Sri Lanka’s Constitution was supposed to set up a Provincial Council for each Province, a High Court for each Province, and make Tamil an official language and English the link language. It was also supposed to set up a Provincial Council for each Province and a High Court for each Province.

Economic and Technological Cooperation Agreement (ETCA):

In 2000, India and Sri Lanka made a deal for free trade. Both countries started to talk about a Comprehensive Economic Partnership Agreement (CEPA) because they wanted to strengthen their economic ties. CEPA would have made trade in services and investments easier. India wants a new trade deal called the Economic and Technological Cooperation Agreement (ETCA), which is an extension of the current FTA. India is looking at the ETCA as a way to help Sri Lanka rebuild its economy after the war by investing in certain areas. On the other hand, the Sri Lankan government wants to use the ETCA to join the Indian supply chain and take advantage of India’s “Make in India” movement. It works out well for everyone. Also, India has said that it will not force Sri Lanka to do anything. The Indian Prime Minister has said twice that Indian economic cooperation will be based on Sri Lanka’s needs and goals.

• Goals: The ETCA agreement wants to make it easier for institutions to work together on technical issues, scientific research, and scientific expertise. It also wants to raise the standards of goods and services so that they can compete on the global market. Finally, it wants to make it easier for people to get training and develop their skills.

• Problems: However, the progress on ETCA has been discouraging, and some people have questioned whether or not the deal will be good for anyone. Sri Lanka’s Joint Opposition said that the deal was a way to make India happy while ignoring the fact that China gave more money.


• As a large and important country in Asia with important national interests in South Asia, India has a special duty to make sure peace and security in its immediate area. India needs Sri Lanka’s help to become a “blue water navy” in the Indian Ocean and to get a stable seat on the UN Security Council (UNSC).

• Since both countries are free, there is room to grow and strengthen the ties between them.

• Both countries should try to work together to find a long-term answer to the problem of fishermen.

• Both countries need to sign the Comprehensive Economic Partnership Agreement (CEPA) in order for their economies to work together better.

• If India wants to get along better with Sri Lanka, it needs to pay more attention to its religious and cultural ties.

• People can get to know each other better if there are boat services between India and Sri Lanka.

• The relationship between the two countries can get better if they understand each other’s worries and interests.