India signs Agreement to provide $318 million Line of Credit to Sri Lanka
India has signed an agreement with Sri Lanka to provide USD 318 million as line of credit for developing Sri Lanka’s railway sector. The agreement was signed between Sri Lanka’s Ministry of Finance and Mass media, and Managing Director of India’s Export Import Bank in Colombo.
In 2015, during the visit of Prime Minister Narendra Modi to Sri Lanka he had declared a line of credit of USD 318 million for the development of Sri Lanka’s railway sector. That visit of Prime Minister Modi was the first standalone bilateral visit by an Indian prime minister since 1987.
The line of credit comes at the backdrop of increasing Chinese presence in the Indian Ocean nation. China has made significant investments in Sri Lanka mainly in developing ports. Though China claims the investments are part of its Belt and Road Initiative that aims to link it with Europe and Africa via the Indian Ocean, the ports have the potential to be used as a base for its naval operations.
At present, Indian development assistance to Sri Lanka primarily focuses on improvement of infrastructure, livelihood development, education, healthcare, and capacity building. India continues to be a major developmental partner for Sri Lanka for nearly 40 years.
So far India has provided four lines of credit to Sri Lanka for developing its railway sector that totally amounted to USD 966 million. Sri Lanka has made used of these credit facilities to improve the southern and northern railway lines as well as for procuring the rolling stocks for the Sri Lanka Railways.
In addition, over the years Indian foreign direct investment in Sri Lanka has also increased rapidly.