How is India responding to the crises in Sri Lanka?

 By Danish Yousuf

Sri Lanka for a long time has been a source of competition between India and China given its location along critical shipping lanes. Infact, the dominant narrative was that China had outpaced India in Sri Lanka. However, the current economic and political crisis in the country appears to have put India at a better position as far as its foriegn policy in Sri Lanka is concerned. The crisis situation has provided India with an opportunity to push back against the increasing Chinese influence in the Indian Ocean Region. Sri Lanka is facing two issues at the moment: the economic crisis on one hand and the political instability on the other. While the earlier issue may be prioritised, both these issues have to be dealt with simultaneously.

Analysis of the past makes it clear that in comparison with China, India never was a major lender to the Island nation. But that is changing now. India seems to be slowly  establishing itself as a major assistance provider but in a calculative and democratic  manner making sure that the nation should not become dependent on India in the long run.  A press release by the High Commission of Sri Lanka in India observed that, ‘India was the first country to support Sri Lanka in a manner so that it could secure bridging finance required by Sri Lanka until the economic adjustment programme with the IMF would be negotiated’[i]. This reflects a mature response from India making sure that an internationally recognised lender is part of the process who would track the progress of the assistance extended by the country. The Chinese have, however, expressed their displeasure over Colombo’s decision to go to the IMF for assistance.

To maintain relations with China during the Rajapaksa regime, Sri Lanka ended up alienating all other countries. Since Sri Lanka is attempting to build bilateral relations with India, the United States, and others, this is being seen as a U-turn from its original position towards China.

The IMF has praised India’s support to Sri Lanka in the midst of the current crisis. The international lender, however, is still assessing the situation in the Island nation and will be able to help once they have clarity on the problem. As a prerequisite for receiving IMF assistance, Sri Lanka has to demonstrate that it can put its economy and debt-servicing levels on a sustainable foundation.

Last month, after mass anti-government demonstrations in the country, Mahinda Rajapaksa resigned as Prime Minister of Sri Lanka.  His resignation paved way for the appointment of Ranil Wickremesinghe as new Prime Minister[ii]. Immediately after taking over as PM,  Mr Wickremesinghe expressed gratitude to India’s assistance to the country during “this trying era”.[iii] He has  appreciated India and Japan’s enthusiastic responses to his proposal for the Quad members to take the lead in forming a foreign assistance consortium to assist the crisis-stricken island country[iv]. Mr Wickramasinghe in an interview to the NDTV stated that ‘we are counting for help from India, which has done most of the work for us’[v]. In response to a question on China’s intervention in the Indian Ocean Region, he reiterated the 1987 India-Sri Lanka Agreement saying that Sri Lanka will never allow its soil to be used for anything that is harmful for India’s national security. After the economic crisis resulted in a political crisis, India’s response was that as an eternal and reliable friend of Sri Lanka, “New Delhi is fully supportive of the Island nation’s democracy, stability and economic recovery”[vi].

India has emerged as one of the biggest assistance providers to the Island nation. Since January this year, New Delhi has extended assistance of about 3.5 billion US Dollars in the form of credit currency swaps, credit lines for essentials, and loan deferments[vii]. Thousands of tonnes of oil and petrol, as well as food and medical supplies, have been delivered to Sri Lanka to assist reduce the acute fuel shortage[viii]. Last month, India provided an additional USD 500 million credit line to Sri Lanka to help the nation import petroleum, as the government has been struggling to pay for imports as its foreign exchange reserves have plunged in recent months[ix]. The High Commission of India in Sri Lanka said in a press statement that these efforts testify to India’s ‘Neighbourhood First’ Policy which places people-to-people engagement at its core. India has been able to secure a slew of investment deals[x]. Recently, India was able to secure the agreement for hybrid power projects off the coast of Jaffna, a major success for Indian interests given the proximity to India. However, it must be noted that India did not make this deal a precondition for providing financial assistance. Given the fact that China’s intervention has meant the dilution of democratic institutions in the country, India’s efforts are being looked at, by some, with suspicion. It is, therefore, critical for India to make sure that people in Sri Lanka do not feel that its presence would mean ‘dilution of their sovereignty’.

Seema Guha argues that India should be generous in its financial assistance to Sri Lanka because it will send a strong signal to the rest of South Asia that it is a trustworthy partner[xi]. India, as an emerging global power, has the responsibility to manage issues in its neighbourhood. It is the time when India should stand by the people of Sri Lanka to regain its strategic ground. Effective messaging on the assistance provided to Sri Lanka to overcome the crisis will also help India prepare for the post-crisis era, since Indian assistance at this time will always be remembered. Akhil Bery, from Asia Society Policy Institute, argues that Sri Lanka presents an opportunity for India and the United States to collaborate in order to avoid the humanitarian crisis from getting worse.

This is the right time for Sri Lanka to reorient its China-friendly Foreign Policy, providing it with the opportunity to position its foreign policy with global rules-based order and put in place impartial and realistic financial norms, thus moving away from Chinese opaque, high-interest loans, and unsustainable projects. Many countries including Quad nations will be willing to help Sri Lanka once it is done with reevaluation. One possible area of immediate cooperation is food security[xii].

Dr. George Cooke, founder of Colombo-based think tank Awarelogue Initiative, says that India is helping Sri Lanka to come out of the present crisis situation.[xiii] He explains the situation using a Chinese proverb, “If you give a man a fish, he will be hungry tomorrow. If you teach a man to fish, he will be richer forever.” He seems to suggest that the efforts must resemble some sort of sustainability in them. India is giving Sri Lanka the fish and they are getting through the situation.


[i] High Commissioner Moragoda meets the Finance Minister of India to review the present status of Indo-Lanka economic cooperation. High Commission of Sri Lanka in India. Accessed on 13 May 2022.

[ii] Ranil Wickremesinghe sworn in as Sri Lanka’s new prime minister amid the worst economic crisis. The Indian Express. Accessed on 12 May 2022.

[iii] Sri Lanka PM expresses gratitude to ‘people of India’ over Rs 2 billion humanitarian assistance. The Print. Accessed on 23 May 2022.

[iv]Renil Wickramasinghe. Twitter. Accessed on 27 May 2022.

[v] World Exclusive: Ranil Wickremesinghe, Sri Lanka PM, Speaks To NDTV. NDTV.

[vi] India fully supportive of Sri Lanka’s democracy and economic recovery: MEA. The Business Standard. Accessed on 11 May 2022.

[vii] India reiterates its commitment to the people of Sri Lanka. High Commission of India in Sri Lanka. Accessed on 18 May 2022.

[viii] India sends 15,000 litres of kerosene for fisherfolk in crisis-hit Sri Lanka. The Hindu. Accessed on 24 May 2022.

[ix] India extends an additional $500 million credit line to Sri Lanka for purchasing fuel. The Hindu. Accessed on 11 May 2022.

[x] N. 8.

[xi] How Aiding Sri Lanka In Crisis Can Help India Balance Power With China. Accessed on 24 April 2022.

[xii] U.S. should push the Quad to help Sri Lanka. Nikkei Asia. Accessed on 17 May 2021.

[xiii] Sri Lanka walks a tightrope — Chinese ‘credit card’ on one side, Indian friendship on other. The Print. Accessed on 03 June 2022.