Sri Lanka, India to enhance cooperation in defence, trade and energy: Envoy

High-level visits from the Indian side to Sri Lanka, including by foreign secretary Harsh Shringla and army chief Gen MM Naravane, have helped bridge a trust deficit and prepare the ground for re-energising relations, Sri Lankan high commissioner Milinda Moragoda said on Saturday.

Moragoda described the feeling in some quarters in New Delhi that China has strengthened its position in Sri Lanka at the cost of India as only a “perception”, and said in an interview that New Delhi and Colombo were close to enhancing cooperation in areas ranging from trade to defence and energy.

Bilateral ties were buffeted in February when Sri Lanka scrapped a trilateral agreement with India and Japan for developing the east container terminal of Colombo port. Delays in several other projects and lack of forward movement in efforts to devolve powers to Sri Lanka’s Tamil minority added to problems between the two countries.

An “integrated country strategy” document prepared by Moragoda before he assumed office in India acknowledged that bilateral ties were dominated by a “transactional approach” because of geo-political changes that had resulted in a “growing trust deficit”.

Moragoda said on Saturday recent high-level visits and the presence of leaders in the Indian government who understand Sri Lanka, such as external affairs minister S Jaishankar and petroleum minister Hardeep Puri, have helped address this trust deficit.

“The foreign secretary’s visit has helped a lot...The senior officials on the Indian side...understand us warts and all and that helps. We have the basis now to start building through the transactions on to a strategic relationship,” he said.

A visit by 100 Buddhist monks and senior ministers led by sports minister Namal Rajapaksa to Kushinagar in Uttar Pradesh on October 20 will also boost people-to-people contacts. The delegation will participate in the inauguration of an international airport that is meant to put Kushinagar, the site of Lord Buddha’s parinirvana, on the Buddhist tourism circuit.

Moragoda referred to the integrated country strategy, which has been described as a roadmap for building relations over the next two years, and said the two countries will have to “evolve from a transactional stage to a strategic and then a special relationship”. He added, “The transactional stage is also a trust-building phase because both sides need to learn to do business with each other.”

He said the scrapping of the agreement on the east container terminal at Colombo port because of pressure from trade unions was part of the “untidiness of democracy”. He also noted President Gotabaya Rajapaksa had come up with the proposal for developing the west container proposal as an alternative, and the recent deal on this project between state-owned Sri Lanka Ports Authority and Adani Group will be more advantageous for the Indian firm.

“From a commercial point of view, the west terminal is a better transaction because the investor has more control over it,” he said. “The west terminal shouldn’t be underestimated as 80% of the cargo in Sri Lankan ports is trans-shipment cargo. Out of this, 70% goes to India, and even from this, 35% goes to Adani Group-linked ports.”

Moragoda acknowledged there is a “Chinese investment footprint” in his country but said the feeling that Sri Lanka is moving faster on Chinese investment proposals is just a “perception”. He also pointed out India’s sizeable presence in several sectors such as energy, transportation and railways.

Indian Oil controls one-third of petroleum distribution in Sri Lanka, and there are plans for collaborating on an oil tank farm and exploration, while the two sides are in discussions on development of renewable energy. Indian Railways has done “immense work” to develop Sri Lanka’s rail network and there are more than one million Bajaj three-wheelers on the island nation’s roads, he said.

“We are also studying whether the Aadhar Card can be used as a template in Sri Lanka,” he said, adding Sri Lanka plans to import nano-nitrogen fertiliser from India as part of a move towards organic agriculture.

Moragoda said Sri Lanka will have to “work harder” because the bilateral relationship is asymmetrical. “On the trade and economic side, one of the reasons why we may not be able to make progress as quickly as possible is some of our industries feel maybe sort of overwhelmed by India,” he added. India, he hoped, will be willing to accommodate such an asymmetrical relationship in trade with opportunities for market access without looking for reciprocity.

The two countries are also talking about the possibility of a bilateral currency swap and are in advanced discussions on a maritime surveillance system, Moragoda said.