Geography made us neighbors. History made us brothers. Heritage united us. Friendship stood the test of time. Now investment must strengthen our bonds, trade must expand our horizons, and economic partnership must transform our future.
India’s emergence as a global economic powerhouse presents Sri Lanka with an extraordinary opportunity to accelerate economic recovery and secure long-term prosperity. From energy security and infrastructure to manufacturing, technology, tourism and trade, the potential benefits are enormous. Several landmark bilateral projects have already advanced through agreements, negotiations and initial implementation.
The challenge now is to convert these strategic initiatives into functioning infrastructure, productive investment, employment and economic growth. India’s economic transformation is gathering momentum. Sri Lanka must position itself to benefit from that momentum.
India Stood by Sri Lanka When It Mattered Most
When Sri Lanka’s economy was fighting for survival in 2022, India demonstrated what genuine friendship means. India did not merely offer sympathy. India extended a lifeline that helped move Sri Lanka from intensive care to the Ward towards economic recovery.
New Delhi provided to the tune of US$ 4 billion in assistance through credit facilities, currency support, deferred payments and essential supplies. When Sri Lanka desperately needed fuel, food, medicine and foreign exchange, India responded with exceptional urgency. India helped Sri Lanka withstand the economic emergency. Now a deeper investment partnership can help rebuild its economic strength.
Five Strategic Projects That Could Reshape Sri Lanka’s Economy - TIME TO ACCELERATE IMPLEMENTATION
Five major India–Sri Lanka strategic projects are already in the pipeline, at various stages of negotiation, approval and implementation. These initiatives are not merely bilateral agreements. Together, they could strengthen Sri Lanka’s energy security, industrial competitiveness and regional connectivity.
1. India–Sri Lanka Electricity Grid Interconnection
The proposed electricity connection has advanced through an implementation agreement signed in April 2025 and renewed high-level discussions in 2026. Connecting Sri Lanka to India’s vast electricity market could enable cross-border power trading, renewable energy integration and improved supply reliability. Technical and financial arrangements remain under consideration, making a commercially viable implementation framework the next important milestone.
Affordable, reliable electricity is the foundation for attracting industries, expanding exports and creating employment.
2. Trincomalee Oil Tank Farm and Regional Energy Hub
Trincomalee’s natural harbor and strategic Indian Ocean location offer exceptional commercial potential.
The joint venture between the Ceylon Petroleum Corporation, holding 51%, and Lanka IOC, holding 49%, provides the framework for developing 61 oil tanks. Rehabilitation work has commenced, with initial tanks and associated infrastructure progressing. However, the wider ambition of establishing Trincomalee as a regional energy hub requires further investment and coordinated implementation.
Trincomalee could become a major regional petroleum storage, bunkering and logistics center, attracting investment, generating employment and creating substantial commercial opportunities.
3. India–Sri Lanka Petroleum Pipeline
The proposed petroleum pipeline, included in the India–Sri Lanka–UAE energy cooperation framework signed in April 2025, remains at the planning stage.
Subject to technical, environmental and commercial feasibility, it could strengthen regional energy connectivity, diversify supply arrangements and improve Sri Lanka’s resilience against international energy disruptions.
The Sampur solar project has made tangible progress, moving beyond agreements to groundbreaking and procurement.
The initial 50-megawatt development, with provision for expansion, represents an important step towards cleaner electricity generation. Procurement for the solar plant and battery storage has progressed, while associated transmission infrastructure remains under development.
Its successful commissioning could strengthen energy security and reduce Sri Lanka’s dependence on imported fuels.
5. Kankesanthurai (KKS) Port Redevelopment
India’s approximately US$65 million grant commitment towards redeveloping Kankesanthurai (KKS) Port offers significant opportunities for Northern Sri Lanka. Last month, officials from both countries renewed efforts to finalize outstanding agreements and strengthen implementation coordination. An upgraded port could expand maritime trade, passenger movement, tourism and logistics links with Southern India, benefiting businesses and communities.
The Nagapattinam–Kankesanthurai (KKS) ferry service and India’s UPI digital payment system already demonstrate the practical benefits of closer connectivity.
These successes show what matters most bilateral cooperation delivers its greatest economic value when agreements become operational infrastructure and services.
The Economic and Technology Cooperation Agreement (ETCA) remains unconcluded despite years of prolonged negotiations, repeated delays and missed economic opportunities. While Australia has secured preferential access to India’s booming market through AI-ECTA, Sri Lanka continues to hesitate at its own doorstep. Every further delay risks sacrificing investment opportunities, industrial competitiveness and access to regional supply chains. Sri Lanka must end the cycle of endless negotiations and translate diplomatic commitments into commercially meaningful agreements that safeguard national interests.
The real economic danger is not closer integration with India, but the price is Sri Lanka’s own indecision, which threatens to leave the country on the sidelines while others seize the opportunities of India’s economic rice.
The sooner these outstanding strategic projects are implemented, the sooner their economic benefits will flow into Sri Lanka through increased investment, employment, energy security and industrial growth. Every year saved in implementation brings Sri Lanka one year closer to stronger economic prosperity.
The Adani Withdrawal — An Investment Sri Lanka Should Have Retained
The withdrawal of Adani Green Energy from the proposed 484-megawatt wind power projects in Mannar and Pooneryn in February 2025 was more than the loss of a major renewable energy investment, reportedly valued at approximately US$442 million.
It was a missed opportunity to strengthen Sri Lanka’s reputation as a dependable destination for large-scale Indian private investment. Concerns over the proposed electricity tariff of 8.26 US cents per kilowatt-hour and environmental protection were legitimate. Sri Lanka must safeguard its national interests, secure fair electricity prices and protect its environment.
However, every reasonable effort should have been made to negotiate a commercially acceptable solution and retain such a strategically important investor.
There is also a fundamental issue of sovereign commitments and investor confidence. When governments provide formal assurances or enter into investment agreements, subsequent policy changes must be managed with exceptional care. A change of administration should not automatically undermine legitimate commitments made to investors.
The Adani withdrawal risks sending the wrong signal to international investors - even major investment proposals may face uncertainty after substantial commitments have been made. Had Adani established a successful presence in Sri Lanka, it could have opened the door to substantial additional Indian private investment in energy, ports, logistics, manufacturing and infrastructure. The loss may therefore extend far beyond the original US$442 million proposal.
One successful flagship investment can attract others, generating an economic multiplier far beyond the original project.
Sri Lanka must negotiate firmly, but it must also know how to retain credible investors. Losing a major investment can mean losing opportunities that might have followed it.
India’s Economic Rise — Sri Lanka Must Secure Its Share
India’s expanding economy offers Sri Lanka opportunities far beyond traditional bilateral trade. Indian companies could invest in Sri Lankan manufacturing, pharmaceuticals, technology, logistics, renewable energy and tourism, while Sri Lankan businesses could enter Indian supply chains, establish joint ventures and gain access to capital, technology and international markets.
Sri Lanka should not view India merely as a market of more than 1.4 billion consumers. It should position itself as a strategic production, investment and services partner in India’s expanding economic ecosystem.
Our geographical proximity is an advantage few competing economies possess. But proximity alone does not attract capital. Investors also require efficient approvals, policy consistency, competitive costs and confidence in long-term commitments.
India’s growth will create opportunities across the region. Sri Lanka must ensure that its share is not captured elsewhere.
From Agreements to Implementation — The Economic Dividend Cannot Wait
Major international investments naturally require technical studies, financial negotiations, environmental assessments and regulatory approvals. These safeguards are essential.
However, clear milestones, effective coordination and timely decisions can make the difference between promising agreements and successful investments.
A strengthened high-level bilateral implementation mechanism could help Colombo and New Delhi resolve outstanding matters, maintain project momentum and establish realistic completion schedules.
The objective is not to bypass procedures or compromise national interests. It is to ensure that viable, properly approved projects move efficiently from negotiation to implementation.
The real measure of economic diplomacy should be projects completed, capital invested, jobs created, energy costs reduced and exports generated.
A Historic Opportunity for Both Nations
India brings capital, technology, industrial expertise and access to a vast market. Sri Lanka offers strategic location, maritime connectivity, skilled human resources and significant investment opportunities. Together, these strengths could transform Sri Lanka’s economic future. Sri Lanka must continue welcoming credible investment from every country while protecting its sovereignty, environment and national interests. A stronger partnership with India can complement that wider ambition.
When Sri Lanka faced economic collapse, India proved that true friendship is measured not by words, but by action. Now Indian investment can help transform its future. The foundations are laid, the opportunities are enormous, and the time to turn them into economic reality is now.
(The writer, Ambassador Kana Kananathan, is Executive Director of the Imperial Group of Hotels Kampala, a businessman, former diplomat, lobbyist and expert on African affairs with over four decades of experience on the continent. A long-time resident of Africa, he served as Sri Lanka’s High Commissioner to Uganda and Kenya, with concurrent accreditation to 22 African nations, and as Permanent Representative to UN-Habitat and the UN Environment Programme. He is also an international election observer across Africa and has worked closely with African governments while building enduring relationships with African leaders. He also served as Economic and Investment Advisor to former President Professor Alpha Condé of the Republic of Guinea.)
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