India should help Sri Lanka resist external pressures

Assisting this small island nation out of debt and boosting its GDP growth will also contribute to strengthening India’s ‘neighborhood first’ policy and, in turn, solidify India’s security strategies, write Srimal Fernando and Megha Gupta for South Asia Monitor
Aug 9, 2018
By Srimal Fernando and Megha Gupta
In the first week of August, the Sri Lankan central bank announced that it had secured US$1 billion loan at a 5 percent interest rate from the Chinese to link the ambitious Belt and Road Initiative. Out of eight countries, Sri Lanka has fallen into the trap of borrowing US$13 billion as loans, mostly from the Chinese.
Sri Lanka has been leasing out its vital assets to external powers, which is eventually making it vulnerable to the dilution of its sovereignty. For instance, Sri Lanka has leased the Hambantota port to the Chinese for US$1.1 billion for 99 years and the Sri Lankan government has given a 25-year Corporate Tax concession for the Colombo port city projects being developed by the Chinese. Although so many loans are being taken, the Gross Domestic Product of Sri Lanka is growing at a slow pace, with very high tariffs. This raises an important question: Is borrowing a solution to the economic growth of developing nations like Sri Lanka?
India, being the largest trading partner of Sri Lanka, with a bilateral trade volume of about US$5.2 billion, in favour of India, with most of the trade going through Sri Lankan ports and airports, having these ports is not only advantageous to Sri Lanka but also to India.
These vital nerve centres are economically important for Sri Lanka’s development, but this island nation selling these out to foreign nations like China is a threat to its sovereignty. Therefore, it is important for India to help its neighbouring country to get out of the debt trap, not just for Sri Lanka’s progress but also for its own stability and that of the South Asian region. It will be an economic advantage for India and strengthen the bilateral trade between these two countries. The historical nonaligned principle of equality and mutual benefit gets reiterated through these initiatives by India and Sri Lanka.
There has been a growing concern in Colombo about whether it is deviating from its traditional foreign policy principle of non-alignment and, in the process, compromising its strategic autonomy. India and Sri Lanka, from the time of their independence have chosen for themselves the road of non-alignment and pursuance of an independent foreign policy, thereby maintaining their sovereignty. The reputation that India has gained with third world countries should be sustained for India to keep its integrity intact.
India should thus help the situation such that Sri Lanka can stick to it traditional path of non-alignment. Assisting this small island nation out of debt and boosting its GDP growth will also contribute to strengthening India’s ‘neighborhood first’ policy and, in turn, solidify India’s security strategies.
India has been increasing its defence budget, which now stands at US$52 billion. Instead of raising it year by year it should also think about securing its immediate neighbours by bailing them out from debt traps, allowing India to raise its own internal and external security.
Not only in non-core security areas like the economy, India should also help Sri Lanka resist external pressure and pursue its strategic autonomy in core security areas such as defence.
While Sri Lanka has signed multiple treaties and cooperated on various issues with China, it should still be committed to its own strategic autonomy and, most importantly, prioritize its own policies and interests. In the coming decades, India should pursue its foreign policy in such a way so as to make Sri Lanka its most strategically important partner in the South Asian region.
(The authors are associated with the Jindal School of International Affairs, India. They can be contacted at

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