India concerned over China’s rising investments in Sri Lankan port projects

      08/03/2018

As China rushes to invest in more ports in Sri Lanka, India views with concern the Asian neighbour’s bid to increase its footprint in the Indo-Pacific region. China also recently gifted a naval frigate to the island nation.

“Sri Lanka has started to emerge as the new battleground for the two Asian super powers, India and China. China, Sri Lanka Ports Authority and India are to invest over $700 million for the development of three key ports over the next three years in Sri Lanka,” said a government official.

Though no details have been released about the recent frigate that was gifted to Sri Lanka, market observers believe it could be a Type 053 frigate, or even a Type C28A or C13B corvette, since these three classes are the most common Chinese warships exported to other countries.

The official pointed out that though China’s inroads into the Indian Ocean region need to be carefully monitored, vessels are regularly handed over as part of military aid packages, and that India, too, has done so in the recent past. Apart from ports in Sri Lanka, India has committed an investment of $500 million towards the management and operation of two dedicated berths at the Chabahar port in Iran, and has been assisting Myanmar with infrastructure improvement projects at the Sittwe and Paletwa ports.

Sources said China could “gain exponentially” through extending financial aid for the development of Sri Lanka’s ports.

Though several of China’s projects in Sri Lanka have faced censure, concerns have been raised by the US, India and Japan that China might use Sri Lanka as a military base.

The next three years are set to see fresh investments in Sri Lanka, both from China and India. While India is to invest $40 million to upgrade the Kankesanthurai Port in northern Sri Lanka into a commercial port, and has extended financial assistance from the Export Import bank, the Sri Lankan Treasury has reportedly received aid of $974 million for the Hambantota port project from China, which has already invested $146 million for port development work.

In January, the Export-Import Bank of India (Exim Bank) approved $45.27 million in credit for the reconstruction of Sri Lanka’s Kankesanthurai Port, which was devastated by the December 2004 tsunami and Cyclone Nisha in 2008. Reports indicate that this brings India’s aid for various infrastructure projects in Sri Lanka to $1.4 billion. The Sri Lanka Ports Authority is to invest $100 million for the construction of the East Container Terminal, which is part of the master plan of the Colombo Port Expansion Project. Plans are also afoot for the conversion of Galle Harbour into a tourism port.

Sri Lanka’s maritime sector master plan, developed by Maritime and Transport Business Solutions, a consultancy firm from the Netherlands, and funded by the Asian Development Bank, is said to be nearing completion. As the government looks to promote Sri Lanka’s cruise liner business, more infrastructure facilities are also to be added to the Colombo Port, to get more cruise liners to dock there.