Sri Lanka, an oft-overlooked gem cradled in the Indian Ocean, plays a pivotal role in the tangled geopolitical chessboard between India and China. This island nation finds itself at the epicenter of a dance, an intricate interaction with two of Asia’s heavyweight players. Both nations, laden with strategic intents and economic aspirations, have plunged substantial investments into Sri Lanka’s soil, a phenomenon that oscillates between collaboration and conflict. As both powers extend their reach, Sri Lanka confronts the formidable task of balancing their contrasting influences, a precarious feat that demands sophisticated diplomacy, astute economic foresight, and a deftly crafted strategy of neutrality.
The sheer geographical significance of Sri Lanka cannot be overstated. Nestled at a crossroads of vital East-West trade routes, its position has rendered it a linchpin in the global commerce machinery for centuries. The much-lauded Hambantota Port, along with the evolving Colombo Port and an ambitious network of logistical hubs, have captured the attentions of both Delhi and Beijing as they vie to solidify their footprints in this strategic expanse.
China’s extensive investments through its Belt and Road Initiative (BRI) manifest in massive infrastructure undertakings, including the Hambantota Port and the ambitious Colombo Port City. These projects not only fortify Sri Lanka’s economic ties with Beijing but also raise the specter of growing Chinese dominance. On the other hand, India, with its time-honored ties, concentrates on bolstering energy initiatives, enhancing port infrastructure, and deepening cultural bonds as a countermeasure to China’s encroachment. Each nation, while paving its path, carries distinct motivations, approaches, and attendant risks.
The historical threads linking India and Sri Lanka stretch back over two millennia. With cultural and historical ties that burgeoned from the introduction of Buddhism to the island by Emperor Ashoka’s son, Mahinda, in the 3rd century BCE, the connections run deep. India emerges not just as a neighbor, but a steadfast ally, its investments in Sri Lanka’s renewable energy and infrastructure echoing the sentiments of its Neighborhood First policy, a strategic anchor amidst rising tensions.
In the fiscal realm, India has secured its status as a linchpin trading partner, with bilateral trade totaling around $3.6 billion in 2020. Since 2005, Indian Foreign Direct Investment (FDI) has soared to about $1.7 billion, reflecting an unwavering commitment. Sri Lanka’s role as a crucial cog in India’s maritime security machine further amplifies its significance; approximately 60% of India’s transshipment cargo passes through its ports, cementing the island’s critical positioning in the trade tapestry.
The shadow cast by China’s growing influence does not escape New Delhi’s notice. The leasing of Hambantota Port to China for 99 years serves as a potent reminder of the strategic challenges facing India. Intricately woven into the fabric of regional geopolitics, Sri Lanka occupies a unique position, attracting attention from both giants; a balancing act complicated by the complex ramifications of foreign investments.
Chinese involvement poses a dual-edged sword for Sri Lanka, with the Hambantota and Colombo Port City initiatives seen as cornerstones of the BRI. While Chinese capital brings infrastructure and development, it also ignites fears of impending economic subjugation and sovereignty erosion—a narrative underscored by experiences resembling “debt-trap diplomacy.” This approach is emblematic of China’s broader maritime ambitions, encapsulated in what it dubs the “String of Pearls,” a network of strategic ports designed to safeguard its maritime prerogatives.
In December 2024, President Anura Kumara Dissanayake’s inaugural official voyage to India, marked a significant chapter in Sri Lankan diplomacy. Engaging in substantive discussions with Prime Minister Narendra Modi, the dialogue forged new paths for collaboration, including electrical grid connectivity and a multi-product petroleum pipeline aimed at enhancing economic and energy synergies. Dropping hints of allegiance, Dissanayake affirmed Sri Lanka’s commitment to not permit its territory to become a tool against Indian interests—a stance laden with implications for the bilateral rapport.
While India’s continued presence in Sri Lanka is unmistakable, China’s economic allure and infrastructural savviness provide a compelling counterpoint. The Hambantota International Port, now a key transshipment hub under Chinese stewardship, underscores the high stakes involved. For India, the specter of encirclement looms large, while Sri Lanka tiptoes the fine line connecting friendship and dependence.
In this geopolitical frenzy, Sri Lanka’s diplomatic strategy emerges as an art form in balancing interests. The new regime’s duty pivots on not just sustaining but cultivating these foreign relations, particularly in the wake of the devastating 2022 financial crisis. The country’s calculated pivot towards India—with energy plans involving liquefied natural gas and port enhancements—reflects an intent to shore up its economic fortification and independence.
The intricate perspectives from both sides underscore an underlying vulnerability; Sri Lanka must dodge the perils of becoming captive to either giant. The island’s strategy of economic diversification—cultivating ties with Japan, the European Union, and the United States—stands as testament to its resolve to navigate these treacherous waters. A delicate dance of trade, investment, and transparent governance is essential, especially in the face of skepticism fueled by previous dealings like the Hambantota agreement.
As Sri Lanka wades into the complexities of international relations, it must tread carefully in asserting its sovereignty and fostering trust—both locally and globally. While maintaining crucial economic ties with China, it is equally vital for Sri Lanka to engage constructively with India and other regional partners on security matters, thus safeguarding its autonomy. By weaving itself into cooperative frameworks like BIMSTEC and IORA, Sri Lanka strengthens its ties while assuring China of confident stability.
The diplomatic saga between Sri Lanka, India, and China epitomizes the intricate labyrinth of modern geopolitics, captivatingly illustrating how smaller nations must deftly maneuver through the rivalries of titanic powers. By adopting methodologies that prioritize balanced partnerships, economic resilience, and accountability, Sri Lanka can deflect the threats borne of over-reliance on any single entity.
The road ahead for Sri Lanka is laden with challenges—yet within these challenges lies an opportunity. By embracing strategic autonomy, it can transform vulnerability into strength, steering towards lasting stability and prosperity amid the relentless tides of global affairs.
This article is authored by Kamakshi Wason, Global COO, Tillotoma Foundation.
