Recently, a noteworthy development has surfaced in the energy industry. A Chinese company has secured a contract to establish hybrid wind and solar energy projects on three islands located off the northern Jaffna peninsula in Sri Lanka, which are 45 km from Rameswaram in Tamil Nadu. The Asian Development Bank (ADB) is set to finance this project, which will be implemented on Delft, Nainativu, and Analativu, three islands situated in the Palk Strait off the Jaffna peninsula.
Essential Facts About the Islands
Delft, standing as the largest of three islands, is the nearest to Rameswaram, Tamil Nadu, positioned to the island’s southwest. Sitting between the two is Kachchativu, a small island that India ceded to Sri Lanka in 1974. The waters surrounding these islands have long been a zone of disagreement and competition between Tamil Nadu and Jaffna fishers. This issue has been a bilateral talking point for several years. To address this, India and Sri Lanka agreed to create a Joint Working Group (JWG) on Fisheries in 2016. This group was formed under the supervision of India’s Ministry of Agriculture and Farmers Welfare and Sri Lanka’s Ministry of Fisheries and Aquatic Resources Development. Their goal is to find a lasting solution to the fishermen’s issue.
Sri Lanka’s Stance
Sri Lanka insists it cannot be held accountable for the decision to award the contract to a Chinese company as the project is supported by the ADB. The ADB follows specific procurement guidelines that borrowers must adhere to.
India’s Concerns
India’s main concern revolves around the project site’s geographical proximity to the Indian coastline. Increased Chinese presence in the vicinity is discouraged, given the existing unresolved issues between India and China. This contract was signed amidst unresolved confrontations between India and China in Ladakh. Also, the Sri Lankan government recently terminated a contract with India and Japan concerning the Eastern Container Terminal (ECT). The ECT agreement, which involved India, Sri Lanka, and Japan, aimed to develop the ECT located at the newly expanded southern part of the Colombo Port.
China’s Influence in South Asia
In January 2021, China conducted its third multilateral virtual dialogue with South Asian countries. This meeting aimed at fostering closer cooperation to combat Covid-19 and coordinating their economic agendas. China has committed approximately 100 billion USD in the economies of several South Asian countries, including Afghanistan, Bangladesh, the Maldives, Pakistan, Nepal, and Sri Lanka. It has become the largest overseas investor in the Maldives, Pakistan, and Sri Lanka.
Economic Concerns and Implications for India
Over the past decade, China has supplanted India as the chief trading partner of several South Asian countries. For instance, India’s trade share with the Maldives was 3.4 times larger than that of China’s in 2008, but by 2018, China’s total trade with the Maldives slightly surpassed that of India. Similarly, China’s trade with Bangladesh is currently approximately twice that of India. While India still leads in trade with Nepal and Sri Lanka, the gap has significantly decreased.
Proposed Course of Action
India needs to adopt a two-pronged approach to address this situation. First, it should collaborate with China for the development of these countries to ensure collective prosperity in South Asia. Simultaneously, India should invest in areas where China lacks presence to maintain goodwill and influence in South Asia. India also needs to vehemently condemn plans for the extension of the China-Pakistan Economic Corridor. Additionally, focusing on strengthening traditional and cultural ties could help improve relations with neighboring countries.
