Connectivity corridor between India and Sri Lanka, cheaper energy production and grid interconnection

By Sanath Nanayakkare

Santosh Jha, the High Commissioner of India while delivering the keynote at the 45th National Conference of CA Sri Lanka on 14 October 2024, brought up a topic that the previous government was keen to implement amid protests from various quarters including the Buddhist prelates.

The 23-kilometer Palk Strait Bridge and Tunnel first proposed between 2002-2004 by then prime minister Ranil Wickremasinghe was renewed while he was president between 2022-2024, and it resurfaced last week when the Indian High Commissioner put his finger on the proposal before the new government of Sri Lanka has completed its first month in office.

In addition to that the Indian HC mentioned many other collaborative efforts that Sri Lanka could pursue to benefit from India’s accelerated growth story including cheaper energy production and grid interconnection.

The following are a few excerpts from his speech.

I am truly delighted to have this opportunity to address the 45th National Conference of the Institute of Chartered Accountants of Sri Lanka. I am truly honored and privileged to have received this invitation.My guess is that it is perhaps also a reflection of a growing desire in Sri Lanka to look at India afresh – and to seek advantages from the Indian growth story. If so, this is a legitimate aspiration. We must work hand-in-hand and grow and prosper together. Like it or not, we are naturally intertwined and interlinked – by geography, history, tradition and by our future. We are irreplaceable, indispensable and inextricable as partners. Any attempt to drive a wedge can only be detrimental to our shared future and for our shared aspirations. It will be a negative not just for one side alone but to the other as well – and that too in equal measure. We must, therefore, transcend old mindsets and overcome past hesitations. We must actively work together for our shared goals, objectives and aspirations.

Within the G20, the Indian economy has been a star performer. It is the world’s fastest growing major economy. Its solid fundamentals will ensure that India’s high growth is likely to continue for decades to come. Just to elaborate, ten years ago, India was the 10th largest economy in the world; we are now the fifth largest; and we will soon be the third largest before the end of this decade. Many global experts predict that India could emerge as the second largest economy by 2050.

So, India is clearly emerging as a key player in this ongoing rebalancing. Our share of the global GDP growth, too, is rising exponentially. Sri Lanka, as our closest maritime neighbor, has an obvious opportunity in this context. To plug in to the regional growth engine that is India and to leverage it to rebuild its own growth and prosperity.

The ongoing shifts in global power also implies that the traditional institutions that had managed the global order are increasingly inadequate to deal with them. This includes the UN, the WTO, the WHO and others. They are today completely out of sync with contemporary realities, unrepresentative in terms of emerging global power configurations, and unable to address global challenges. This was most ominously evident during the Covid pandemic, when the UN was mostly a bystander. Metaphorically speaking, their software is not only outdated but also in need of an urgent update.

Ineffectual global institutions have given rise in turn to the phenomenon of plurilateralism. This refers to a group of countries taking recourse to mechanisms that serve their limited agenda and shared interests in an agreed theater. The QUAD, BRICS, BIMSTEC or IORA or the more recent Colombo Security Conclave are best examples. Sri Lanka is already a part of the BIMSTEC, IORA and Colombo Security Conclave. Recently, it has also announced its intention to seek membership of the BRICS. These enable Sri Lanka a role in designing and shaping regional structures and to leverage them to benefit from security and economic structures that are set up within these groupings. Obviously, India as a member of these groupings provide Sri Lanka with another vector for engagement with India. Another example of such plurilateral mechanisms, which is interesting from Sri Lanka’s perspective, is the IMEC – or the India-Middle East-Europe Economic Corridor. This initiative aims to connect India, Middle East, and Europe.

A connectivity corridor between India and Sri Lanka, therefore, can open doors to Sri Lanka to connect with the rest of the world and to access markets and opportunities beyond India that are presently not leveraged.

As India attracts more foreign investors, there is a potential for Sri Lanka to attract business from those who are seeking to enter India. Sri Lanka can position itself as India plus one, in several areas – from services to manufacturing. It can leverage its location, and of course, its strong bilateral business and commercial links with India.

After the Presidential Elections in Sri Lanka, External Affairs Minister Dr. S. Jaishankar became the first foreign dignitary to visit Sri Lanka. This is indicative of the priority we accord to the bilateral partnership with Sri Lanka. In his meetings with the Sri Lankan leadership, EAM discussed ongoing initiatives in the field of cheaper energy production and grid interconnection, low-cost fuel and LNG supply, solar electrification of religious places, connectivity, DPI, health and dairy development. Our approach is closely linked to Sri Lanka’s priorities and seeks to strengthen the effort of the Sri Lanka Government to fulfill the growing aspirations of its people. Like in the domestic domain, our foreign policy towards Sri Lanka, too, is people-centric – the benefits to them are the only benchmark of our efforts.

For this reason, India is looking at assisting development of Sri Lanka through investments and grants, and relatively less through debt instruments. This, we believe, serves Sri Lanka better given its recent experiences with debt burdens. For this reason, EAM Jaishankar announced that payments for 07 completed Lines of Credit projects to the tune of 20 million US dollars would be converted into Grant assistance.