Sri Lanka invites more Indian investments in ports, energy, manufacturing

Sri Lanka has urged more Indian investments in ports, infrastructure, energy, power and manufacturing sectors, days after New Delhi announced a USD 900 million loan to Colombo to build up its depleted foreign reserves and for food imports amid a shortage of almost all essential commodities in the island nation.

Sri Lankan Finance Minister Basil Rajapaksa held talks with External Affairs Minister S Jaishankar on Saturday during which the two ministers discussed projects and investment plans by India that would strengthen the economy of the island nation.

While thanking India for the economic package, Rajapaksa welcomed more Indian investments in Sri Lanka, and assured that a conducive environment would be provided that would benefit both sides.

Rajapaksa recalled India's long standing cooperation with Sri Lanka and deeply appreciated the gestures of support.

He welcomed Indian investments in Sri Lanka in a number of important spheres including ports, infrastructure, energy, renewable energy, power and manufacturing and assured that a conducive environment will be provided to encourage such investments, according to a press release issued by the Indian side.

During the meeting, both ministers noted that the recent steps taken by Sri Lanka for jointly modernising Trincomalee Oil Tank Farms will boost confidence of investors, apart from enhancing Sri Lanka's energy security, it added.

Earlier this month, Sri Lanka signed an agreement with India to jointly redevelop the strategic World War II-era oil tank farm in the island nation's eastern port district of Trincomalee, in a new milestone in bilateral economic and energy partnership.

India's extension of USD 400 million to Sri Lanka under the SAARC currency swap arrangement and deferral of A.C.U. settlement of USD 515.2 million by two months, are key assistance in the current Sri Lankan foreign currency shortage situation, according to analysts.

Jaishankar conveyed that India has always stood with Sri Lanka, and will continue to support Sri Lanka in all possible ways for overcoming the economic and other challenges posed by the COVID-19 pandemic.

As close friends and maritime neighbours, both India and Sri Lanka stand to gain from closer economic interlinkages, the external affairs minister conveyed.

The two ministers also reviewed the progress made in the extension of the Indian credit facility of USD 1 billion for importing food and other essential items.

Top economist and former Sri Lankan Central Bank Deputy Governor WA Wijewardena last week said that while India's economic package has given Sri Lanka some breathing space, tough measures, including a bailout from the International Monetary Fund (IMF) was needed to prevent the economy from heading into a perpetual tailspin.

Sri Lanka is facing its all-time worst foreign exchange crisis after the pandemic hit the nation's earnings from tourism and remittances. By December, the reserves position had plummeted to just one month's imports or a little over USD 1 billion.

In recent months, the public has experienced a shortage of many essentials due to the foreign exchange crisis. Import restrictions to save dollars have threatened cooking gas and fuel supplies in addition to the looming power cuts.