The recent decision by Sri Lanka to offer the West Container Terminal (WCT) to Indian and Japanese companies is making news headlines. The move comes after the Sri Lankan government ejected these two partners from a 2019 pact to jointly develop the East Container Terminal (ECT). This move was prompted by opposition to foreign involvement.
Key Aspects of the Decision
Sri Lanka has green-lighted a proposal for Indian and Japanese firms to develop the West Container Terminal (WCT) under a Build, Operate and Transfer (BOT) scheme. This project, which will last for a period of 35 years, is set to be a public-private partnership with Adani Ports and Special Economic Zone Limited, representing India, and a yet-to-be-named Japanese investor.
Stakes in the Project
In the previous ECT project agreed upon, the Sri Lanka Ports Authority (SLPA) was set to hold majority stakes (51%). However, in the WCT agreement, India and Japan are due to be granted an 85% stake. Such terms echo the arrangement made for the Colombo International Container Terminal (CICT), where China Merchants Port Holdings Company Limited control an 85% stake.
Significance of the WCT
The WCT’s location is close to the China-operated CICT and only a few kilometers from the China-backed Port City. India, known for its concerns over China’s presence in Sri Lanka, views this as a strategic advantage. This move fits well into India’s strategic vision (SAGAR) for the Indian Ocean and its ‘Neighbourhood First policy.’ It also helps counteract China’s String of Pearls strategy. This strategic shift occurs at a time when Sri Lanka needs support at the ongoing UN Human Rights Council session, where the country’s rights record will soon be tabled for a vote.
India and Sri Lanka: A Long-Standing Relationship
India shares an extensive past with Sri Lanka that dates back over 2,500 years. This cultural, intellectual, religious, and linguistic connection has laid the foundation for their current political and economic ties. During the civil war period, India stood by the Sri Lankan government in its fight against terrorism.
Continued Collaboration and Support
India’s support extends not only to military matters but also to civil recovery efforts. The Indian Housing Project, which aims to construct 50,000 houses for war victims and estate workers, is a fine example of this commitment. More recently, India extended a USD 400 million currency swap facility to aid Sri Lanka’s financial stability, severely affected by the Covid-19 pandemic. Sri Lanka also benefited from India’s distribution of Covid-19 vaccines.
Military Cooperation Between the Two Countries
The military collaboration between India and Sri Lanka is marked by joint exercises like Mitra Shakti (Military) and SLINEX (Naval).
The Bigger Picture: Regional Cooperation
Sri Lanka participates actively in regional groupings such as BIMSTEC and SAARC, where India plays a significant role. This involvement further strengthens the relationship between the two countries and fosters greater cooperation across multi-sectoral technical and economic initiatives.
