The governments of India and Sri Lanka on Friday (21) revealed their plans to enhance economic relations through increased cooperation in renewable energy and the exploration of a potential oil pipeline and land bridge connecting the two countries.
Additionally, India will provide support in developing a port and economic hub in Trincomalee, a city situated on Sri Lanka's northeastern coast.
These announcements were made during discussions held between Sri Lankan president Ranil Wickremesinghe and Indian prime minister Narendra Modi in New Delhi on Friday morning.
During the period between January and July of the previous year, India's crucial financial support of nearly $4 billion played a significant role in assisting Sri Lanka when it faced the risk of depleting its foreign exchange reserves and experienced a severe financial crisis.
This support was essential in helping Sri Lanka manage its financial challenges and secure funds for vital imports, including fuel and medicine.
Modi said on Friday that the two leaders "adopted a vision document for our Economic Partnership" to strengthen maritime, air, energy and people-to-people connectivity, to accelerate mutual cooperation in tourism, power, trade, higher education, and skill development.
Modi also said the two sides would work quickly to connect their electricity grids and study the feasibility of building a petroleum pipeline and a land bridge between the countries, which are about 50 km (31 miles) apart at one point.
The projects to connect the power grids through undersea cables and the oil pipeline are expected to cost around $4 billion in total, according to officials on both sides. Few details were released on the agreements on renewables.
Wickremesinghe said that "constructing a multi-product petroleum pipeline from the southern part of India to Sri Lanka will ensure an affordable and reliable supply of energy to Sri Lanka."
The two countries also will soon restart negotiations on a more expansive trade deal known as the Economic and Technological Cooperation Agreement.
Wickremesinghe also said that he had updated Modi about the reform measures being taken by his government to resolve the island's financial crisis, and expressed appreciation for the support provided by India for the "most challenging period in modern history".
Sri Lanka defaulted on its foreign debt last May and India is part of a common platform established with Japan and other Paris Club members to help the island restructure its debt.
India remains a key creditor to the island with $1.9 billion in outstanding debt.
While New Delhi has traditionally had strong ties with its southern neighbour, the small island nation has become a jousting ground between India and China due to its strategic location in the Indian Ocean.
The two-day visit to New Delhi is Wickremesinghe's first since he took over as the president a year ago after his predecessor was forced out of office following widespread protests against the economic crisis.
(With inputs from Reuters)
Piyush Goyal and Jonathan Reynolds tour the Royal Opera House in London
