India today signed an agreement with Sri Lanka to provide USD 318 million as line of credit to develop the island nation's railway sector, officials said.
The agreement was signed by RHS Samaratunga, Secretary, Ministry of Finance and Mass media, and David Rasquinha, Managing Director of India's Export-Import Bank in Colombo.
During his first visit to Sri Lanka as prime minister in 2015, Narendra Modi had declared a line of credit of USD 318 million for the development of Sri Lanka's railway sector.
That visit, the first standalone bilateral visit by an Indian prime minister since 1987, had come in the backdrop of increasing Chinese presence in the Indian Ocean nation.
China has been investing heavily in Sri Lanka, developing mainly ports that could potentially be used as a base for its navy, though Beijing says the investments are part of its Belt and Road Initiative that aims to link it with Europe and Africa via the Indian Ocean.
India has provided four lines of credit to Sri Lanka to develop its railway sector, amounting to USD 966 million.
These credit facilities have been utilised to improve the southern and northern railway lines and for the procurement of rolling stocks for the Sri Lanka Railways.
Sri Lanka's Ministry of Transport has said improving passenger transportation facilities is urgently required to attract passengers towards railways which is cost-effective.
India has been Sri Lanka's major development partner in the South Asian region for more than 40 years. Over the past years Indian foreign direct investment in Sri Lanka has expanded considerably.
Presently Indian development assistance mainly focuses on improvement of infrastructure, livelihood development, education, healthcare, and capacity building.
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