INLK India-Sri Lanka International Relations: History, Strategy & Shared Futures
The bilateral relationship between India and Sri Lanka is known as India-Sri Lankan relations, Indo-Sri Lankan relations, or India-Sri Lanka relations. In Sri Lanka's efforts to boost its economy, streamline its bureaucracy, and improve decision-making for upcoming business partnerships, India has emerged as a leading partner. A marine boundary separates Sri Lanka and India. With the Palk Strait separating them, India is Sri Lanka's only neighbor. Both countries have worked to establish a shared security umbrella in the Indian Ocean and hold a vital location in South Asia. Sri Lanka and India are both Commonwealth of Nations member republics.
India is the island's biggest trading partner, and the two nations have a tight economic relationship. A deal to create a prototype single market is also being discussed at an advanced stage. India was the first country to formally approve Sri Lanka's request for financial assistance and debt restructuring from the International Monetary Fund.
There are deep ethnic and cultural links between the two countries. In a bid to foster and safeguard the Buddhist connections between India and Sri Lanka, Prime Minister Narendra Modi unveiled a grant assistance of USD 15 million during the Virtual Bilateral Summit in September 2020. This financial support is intended for various purposes, including the restoration or establishment of Buddhist monasteries, the education of young monks, the enhancement of interaction among Buddhist scholars and clergy, the establishment of museums dedicated to Buddhist heritage, the facilitation of cultural exchanges, collaborative efforts in archaeology, and the mutual showcasing of the Buddha's relics.
Sri Lankan President Anura Kumara Dissanayake with President of India Droupadi Murmu and Prime Minister of India Narendra Modi
India-Sri Lankan Relations: Deep Roots & Modern partnerships
1. Historical Foundations & Community Bonds
- Ancient religious and cultural relations: Sanghamitta, the daughter of Ashoka, brought Buddhism to Sri Lanka in the fourth century BCE, establishing strong ties to India.
- Shared legacy was also shaped by the cultural ties between Tamils and Hindus over the Palk Strait.
- The status of individuals of Indian descent in Ceylon (Sri Lanka) was addressed by the Nehru-Kotelawala Pact (1954), the Sirima-Shastri Pact (1964), and the Sirima-Gandhi Pact (1974), which resolved the complicated problem of statelessness for hundreds of thousands of people.
2. Economic & Trade Cooperation
- In fiscal year 2023-2024, bilateral trade totaled over USD 5.5 billion, of which Sri Lanka exported USD 1.4 billion and India exported USD 4.1 billion.
- More than 60% of Sri Lankan exports to India benefit from tariffs after the Free Trade Agreement of 1998.
- By 2023, India will have invested approximately USD 2.25 billion in Sri Lanka.
- Over USD 7 billion in credit lines and grants have been given by India, including over USD 4 billion for the 2022 economic crisis and pandemic-related aid.
3. Connectivity & Infrastructure
In order to promote tourism and trade, the high-speed ferry HSC Cheriyapani was inaugurated in October 2023, reestablishing the connection between Nagapattinam (Tamil Nadu) and Kankesanthurai (Jaffna) after a four-decade break. It returned to service in August 2024
There are plans for a 23-kilometer Palk Strait Bridge & Tunnel that would connect Tamil Nadu with Mannar Island, Sri Lanka; feasibility studies have been done; however, the current administration of Sri Lanka is still wary of land connectivity.
When operational (planned for roughly 2030), the India-Sri Lanka HVDC Grid Interconnection, a subsea power link, might facilitate energy trading and mark a significant infrastructure milestone. 4. Defense & Security Collaboration
SLINEX (naval) and Mitra Shakti (army) are yearly combined military exercises that improve marine security and interoperability; SLINEX-24 took place in December 2024.
With a USD 6 million donation, India assisted in the establishment of the Maritime Rescue Coordination Centers (MRCC) in Colombo, Hambantota, and Galle as part of the Maldives- and Mauritius-led Colombo Security Conclave.
In 2025, a historic five-year Defense Memorandum of Understanding was signed to strengthen defense-industrial ties, marine surveillance, and cooperative training.
5. Energy and Strategic Projects
Prime Minister Narendra Modi was the first head of state to meet President Anura Kumara Dissanayake in Colombo, where he signed important energy and defense agreements and inaugurated a 120 MW solar installation in April 2025.
In order to improve energy resilience and maritime positioning, a trilateral Memorandum of Understanding with the UAE calls for the construction of an energy hub in Trincomalee, along with a multiproduct pipeline.
India reduced interest rates on other loans and turned more than $100 million in current loans into grants to aid Sri Lanka's debt restructuring.
6. Political Dynamics & Challenges
When President Dissanayake took office in September 2024, he distanced Sri Lanka from megadeals with Indian ties, such as the USD 442 million Adani wind farm project, and vowed to uphold transparency and energy sovereignty. However, in early 2025, Sri Lanka canceled the agreement due to accusations of corruption.
The administration must balance managing Indian financial help (around USD 4.5 billion) and navigating Sino-Indian competition while also addressing public criticism of growing Indian influence.
Diplomatic difficulties persist due to long-standing disagreements, including the status of Katchatheevu Island, illicit fishing in the Palk Strait, and the application of Sri Lanka's 13th Amendment.
India's engagement with Tamil regions in Sri Lanka continues to be centered on ethnic concerns, particularly the rights of Indian-origin Tamils (IOTs), who number about 1.6 million.
7. Outlook & Strategic Significance
In terms of trade, investment, and tourism, Sri Lanka is one of India's closest neighbors. In 2024, almost 20% of Sri Lanka's visitors (around 416,000) were Indian.
Sri Lanka is an important maritime partner in the face of growing Chinese influence in the Indian Ocean and carries strategic weight for India's "Neighborhood First" and MAHASAGAR policy.
The Colombo government's evolving foreign policy aims for balance by promoting relationships that preserve sovereignty, keeping connections with India, and cautiously approaching China.
Key Takeaways
Historical & Cultural—Shared Buddhist ties, cultural exchange, relic exhibitions, and educational outreach
Economic & Trade—USD 5.5B trade, FTA in place, significant Indian FDI (~USD 2.25 B), crisis aid support
Interconnection grid connections, ferry service, and a proposed bridge are in progress.
Protection and safety of MRCC, Defense MoU Energy Strategy, and joint exercises (SLINEX, Mitra Shakti), Trincomalee hub, electricity pipeline, solar installations, and renewable energy.
Political Factors Change under the new president, evaluation of previous initiatives, and balancing the impact of China and India
Conclusion
The current relationship between India and Sri Lanka is a complex fusion of historical customs and contemporary collaboration. The two countries have established a strong connection spanning trade, infrastructure, culture, and security, all rooted in their shared heritage. Recent events demonstrate both Colombo's nuanced diplomacy under President Dissanayake and India's dedication to Sri Lanka's economic stability and resilience. The future of this long-lasting cooperation will be shaped by preserving balance and respect for one another and strategic vision as regional geopolitics change, particularly in light of expanding Chinese ambitions.
