Foreign Policy Watch: India-Sri Lanka

India, Japan back in another Sri Lanka port project

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Various ports of Sri Lanka

Mains level : China as deterrent in India's neighbourhood policy

Sri Lanka has confirmed that it will develop the West Container Terminal (WCT) at the Colombo Port along with India and Japan.

Q.The threat of Chinese presence in South Asia can be tackled more effectively if India changes course in its dealings with its neighbours and becomes more sensitive to their concerns. Critically analyse.

 Why in news?

  • The decision comes a month after the Rajapaksa government ejected the two partners from a 2019 tripartite agreement to jointly develop the East Container Terminal (ECT), citing resistance to “foreign involvement”.
  • Neither India nor Japan has officially commented on the offer, or on the said private investment from the countries.

An alternative to ECT

  • SL has offered India and Japan the WCT as an alternative, allowing higher stakes.
  • In the ECT project agreed upon earlier, the Sri Lanka Ports Authority (SLPA) was to hold a majority 51%, but in the WCT proposal, India and Japan will be accorded an 85% stake.
  • The nearby Colombo International Container Terminal (CICT), where China Merchants Port Holdings Company Limited holds 85%.
  • This makes it a strategically desirable spot for India, whose concerns over China’s presence in Sri Lanka are well known.

Issues with a new project

  • The WCT is adjacent to the China-run CICT and just a couple of kilometres away from the China-backed Port City being built on reclaimed land.
  • The West Container Terminal, however, has to be built from scratch, requiring a much higher investment.
  • The return on investment has not been envisaged yet.

Why is Colombo so generous this time?

  • Colombo’s alternative offer also comes at a time when Sri Lanka is seeking support at the ongoing UN Human Right Council session, where a resolution on the country’s rights record will soon be put to vote.
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