India’s rising leadership role in the region, growing engagement with Asean and within forums such as the South Asian Association for Regional Cooperation (SAARC) is helping to protect the common interests of India and its southern island neighbour Sri Lanka.
The increasing interdependence of India and Sri Lanka across many fronts reflects common strategic interests. For its part, Sri Lanka is pursuing a new foreign policy direction in light of the increasing importance of collaboration between South and East Asia, mainly focusing on commercial diplomacy with India.
As the largest nation in South Asia, India considers Sri Lanka important to its own geopolitical and trade interests and in promoting a “Neighbourhood First” policy. A deeper commitment to Sri Lanka is also reflected in India’s strategic vision for the Indian Ocean, which was first outlined in 2015 and has come to be known as Security and Growth for All in the Region (Sagar).
The evolving geopolitical concerns facing the South Asian region in general have also prompted India to forge a deeper commitment to Sri Lanka.
Meanwhile, trade instruments including the South Asian Free Trade Area (Safta) and the Indo-Sri Lanka Free Trade (ISFTA) agreement have emerged as useful tools that those outside the region — including members of Asean — can use to access South Asia’s large consumer markets.
Under its Act East foreign policy — an upgrade by the Narendra Modi administration of the earlier Look East initiative — India is powerfully positioned among Asean countries. Asean-India cooperation took a huge leap forward when the two sides signed the Asean-India Free Trade Area (Aifta) agreement that came into force in 2010. India’s evolving position as a major Asian power is creating a major link for Asean nations to gain greater access to the other eight SAARC countries.
The 17th Asean-India summit this month took India’s relations with the 10-member Asean bloc to a whole new level, reinforcing cooperation across multiple sectors.
Sri Lanka has been following India’s lead by pursuing more trade agreements with neighbours to the east. The Sri Lanka-Singapore FTA, which took effect in 2018, reduced tariffs between the two countries by up to 80%, further cementing their relationship.
In the two decades since the Indo-Sri Lanka FTA took effect, Sri Lankan bilateral trade with its large neighbour has also expanded substantially.
Before the coronavirus began to sweep across the globe, India’s economy was booming, with its US$2.5-trillion gross domestic product (GDP) experiencing growth averaging over 5% annually from 2017-19. It is one of Sri Lanka’s largest trading and investment partners in the SAARC region, amounting to $5.3 billion, according to the Indian High Commission in Colombo in 2019.
Sri Lanka’s foreign policy as an island nation should be to promote its national interests in sync with mainland India without compromising its relations with other major nations.
Under the new “India First” doctrine, Sri Lanka does not aim to jeopardise India’s ongoing strategic security interests in the Indian Ocean. The main aim of the policy is to create a shift in the global order wherein Sri Lanka would no longer be reliant on a West-oriented policy.
And while Colombo remains open to dealing with other key players, it aims to build on its good relationship with its closest neighbour to influence trade, aid and maritime security, all of which require a new impetus in an uncertain era.
The United States also considers Sri Lanka a gateway to the Indian Ocean and a key partner in the Indo-Pacific region. Its proximity to India, and its position as an island nation, provide Sri Lanka with strategic importance in maintaining political and economic interdependence.
South Asia and East Asia are among the world’s fastest growing regions. Mutually
beneficial agreements are now bringing SAARC and Asean closer, increasing trade volume, both inter-regional and intra-regional.
Historically, India has stood by Sri Lanka in its time of need and today it still abides by this policy by being a reliable partner and helping to ease the island nation’s economic burden. Therefore, Sri Lanka considers India as its most trusted and closest external partner, which helps guarantees its security and progress.
Dr Srimal Fernando is a recipient of the OP Jindal Doctoral Fellowship and SAU Scholarship under the SAARC umbrella. He is the author of the upcoming book Politics, Economics and Connectivity: In Search of South Asian Union.