Neighbors: India for deepening civilizational ties, and economic integration with Sri Lanka

Virendra Pandit 

New Delhi: Finance Minister Nirmala Sitharaman on Thursday said India favors deepening its civilizational ties and economic integration with India and will closely work with the island nation on debt restructuring attempts and economic recovery.

Addressing the India-Sri Lanka Business Summit in Colombo on Thursday, during a three-day visit, she urged industry leaders for economic integration with Sri Lanka to mitigate the risk of the foreign exchange-driven crisis.

Sitharaman assured India will continue to work closely with the island nation on debt restructuring discussions and extend support for its economic recovery.

“The task is cut out for industry leaders and it is for us to make sure that both countries will have economic integration to avoid supply chain disruptions so that there will be no foreign exchange-driven crisis impact on the country and also reduce dependency on anyone economy.”

“Yet, there could be some arrangements (bilateral) between the two countries for issues such as logistical cost and essential goods, etc. which benefits both the nations,” the media reports, quoting Sitharaman, said.

All over the world, there is a clear interest in bilateral agreements/arrangements given the global situation. The countries would like to have arrangements in regional currencies so that there would not be shocks because of the currency’s volatility; there will not be forex-driven crises where two countries understand each other’s strengths. Bilateral arrangements ensure that food security is in place and energy should not go on a roller coaster ride, she emphasized.

Highlighting the need for robust digital infrastructure, the FM said New Delhi would be able to save Rs 2 trillion through 45 central schemes as technology has helped in weeding out middlemen and corruption.

She also exhorted Sri Lanka to utilize its solar and wind energy powers as there is a huge rush for investments.

The per unit cost of solar energy in India has come down from Rs.14 or 15 some five years ago to just Rs. 2.45 now because of favorable government policy and healthy competition, she said.

At an event to celebrate the 200 years of the arrival of Indian-origin Tamils in Sri Lanka, Sitharaman said some of the connectivity projects that have made progress include the commencement of passenger ferry services, negotiations on an economic and technological cooperation agreement, and UPI-based digital payments, which will be launched soon.

“We are working closely in other identified areas as well. As we enhance connectivity between the two countries, we build enduring bridges of experience and opportunities for our people…the Indian- origin Tamils will continue to play an important role in shaping a shared future for our two countries,” Sitharaman said.

She recalled how India rendered unprecedented financial assistance of over USD 4 billion for the people of Sri Lanka and was the first bilateral creditor to convey financing assurance to the International Monetary Fund in 2022 when the island nation faced an acute economic crisis that also snowballed into political instability.

“(It) paved the way for others to provide similar assurances that formalized the IMF program for Sri Lanka,” Sitharaman said.

She highlighted that 3,700 houses have already been handed over to the plantation workers, under the India-backed housing project scheme, and the foundation stone for 10,000 houses under phase four of the program had also been laid.

Sitharaman also announced that India would soon send teacher trainers to work with local teachers to keep them abreast of the latest developments and enhance their teaching skills in meeting the growing needs and aspirations of students from the Malayaha Tamil community.

“Our leaders have released a vision document for economic partnership in July this year, outlining specific areas of cooperation for sustainable economic development and prosperity for our people. Our government will work closely with the Sri Lankan government in realizing the vision provided by our leadership,” she added.

“We are working closely on other identified areas as well…As we enhance connectivity between the two countries, we build enduring bridges of experience and opportunities for our people…the Indian origin Tamils will continue to play an important role in shaping a shared future for our two countries,” Sitharaman said.