The current year saw further consolidation in India-Sri Lanka relations with high-level visits, expansion of trade, increased Indian investments in Sri Lanka, and augmentation of defense linkages. The President, Prime Minister, Leader of Opposition and Foreign Minister of Sri Lanka all visited India during this period in order to exchange views on bilateral issues and other areas of mutual interest and to work towards further intensification of bilateral relations. The close political understanding between the two countries and the importance accorded to bilateral relations is reflected by the endorsement of India’s candidature for a permanent seat in the UN Security Council.
Parliamentary elections were held in Sri Lanka in April 2004 and a new government under the leadership of Prime Minister Mahinda Rajapaksa assumed office. Prime Minister Rajapaksa chose India as the first destination of
his visit abroad in July 2004. Sri Lankan Foreign Minister Lakshman Kadirgamar had earlier visited India on 28-29 April 2004. President Chandrika Bandaranaike Kumaratunga visited India from 4-7 November 2004 and Leader of Opposition Ranil Wickremesinghe was in India from 11-14 October 2004.
The Sri Lankan leaders also briefed India on developments in the peace process in Sri Lanka. India reiterated its support for the process of seeking a comprehensive, negotiated settlement acceptable to all communities of Sri Lanka, which should reflect the pluralistic nature of Sri Lankan society, within the framework of a united Sri Lanka and consistent with democracy and respect for individual rights. India maintains an abiding interest in the security of Sri Lanka and remains committed to its unity, sovereignty and territorial integrity. India favours the early resumption of negotiations pertaining to the peace process. Any interim arrangement on administration should be an integral part of an enduring final settlement that maintains the unity and territorial integrity of Sri Lanka and ensures the safety, well-being and prosperity of the people.
The Sri Lanka peace process is currently stalled. The LTTE withheld participation in the peace process from April 2003. Subsequently, it proposed creation of an Interim Self-Governing Authority (IGSA) for the Northern and Eastern areas, which is clearly outside the present constitution of Sri Lanka. The LTTE, on its part, is refusing to state unambiguously that it is committed to a unified Sri Lanka. A new dimension to the peace process was added in 2004 as a result of rebellion by LTTE’s prominent eastern military commander Karuna, which added to the bloody internecine conflict and assassinations.
The existing understandings between India and Sri Lanka on the humane treatment and early release of fishermen who stray across maritime boundary lines continued to be implemented. It has been decided to constitute a Joint Working Group to deal with this issue. The Joint Working Group would meet frequently to deal with issues relating to straying fishermen, work out modalities for prevention of use of force against them and the early release of confiscated boats, and explore possibilities of working towards bilateral arrangements for licensed fishing. A memorandum of understanding on fisheries that will institutionalize cooperation in the fisheries sector between the two countries is also under consideration. Some of the salient features of this memorandum are consideration
of licensed fishing, cooperation in enhanced surveillance to minimize the problems of incursions of trawlers from both sides and cooperation in preservation of ecology and conservation of marine fisheries in the Palk Straits.
A large number of Sri Lankan soldiers, sailors and airmen are being trained in Indian defense establishments. About 2100 slots in various defense institutions in India are expected to be utilized by Sri Lankan armed forces personnel in the current year. A bilateral Defense Cooperation Agreement and the memorandum of understanding on the Rehabilitation of the Airfield in Palaly are under consideration.
Bilateral economic ties saw further intensification during this period. In addition to expansion of trade and an increase in investments, efforts were made to deepen and widen the framework of trade by upgrading the Free Trade Agreement into a Comprehensive Economic Partnership Agreement by including trade in services and investments.
Two rounds of talks at the level of Commerce Secretary on the Comprehensive Economic Partnership Agreement were held in August 2004 and February 2005.
India is today the fourth largest foreign direct investor in Sri Lanka (after Singapore, UK and Australia). Although historical inflows have been low, there has been an rapid increase after the Free Trade Agreement became operational. A major attraction for Indian investors has been the ability to re-export to India while benefiting from lower tariffs on raw materials in Sri Lanka. Belying the erstwhile trend, India was the biggest FDI investor in Sri Lanka in 2002 and 2003.
Sri Lanka Board of Investment as of August 2004 had given approvals to 147 projects with total FDI of US$
450 million. Figures of actual inflows are not available but it is estimated that 50 per cent of Indian investment in SAARC countries is in Sri Lanka. A major power project involving setting-up of a 300 MW coal or LNG driven power plant by the National Thermal Power Corporation and Bharat Heavy Electricals Ltd is under consideration.
The Government of India has extended a number of credit lines to Sri Lanka. Two of them are currently operational.
These are a US $100 million line of credit for capital goods, consumer durables, consultancy services and food items and a US $31 million line of credit for supply of 300,000 tonnes of wheat to Sri Lanka. In addition a US $150 million line of credit has been offered to the Sri Lankan
government for purchase of petroleum products as has been another US $100 million line of credit for rural infrastructure projects. Thus a total of about US $381 million (approx. Rs 1700 crores) is being made available to Sri Lankan Government through lines of credit.
The Government of India is in the process of executing development projects in Sri Lanka worth about Rs 70 crores and has made additional commitments worth approximately US$ 87 million. The projects that are being implemented or are being considered include the construction of a general hospital, grant towards construction of a Cancer Hospital, projects to strengthen educational and vocational training systems, conduct of
1500 cataract operations and rural development projects.
Following the devastating tsunami on 26 December 2004, on the request of Sri Lankan Government, massive Indian relief operation involving naval ships and helicopters got underway in Sri Lanka. The Indian naval ships with medical teams, aircrafts, vessels provided immediate assistance in search, rescue, transport, damage assessment operations, salvage and debris clearance in the harbours of Galle, Trincomalee and other areas. The fact that Indian relief was the first to arrive has been acknowledged by President Kumaratunga and Foreign Minister Kadirgamar among others.
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uilding on tremendous historical and cultural linkages with the South-east Asia region, India continued to pursue closer relations with South East Asia as envisioned in its Look East Policy. India’s Look East Policy has been extended to Phase II, beyond South East Asia to the Pacific region. Regular exchange of high level visits at bilateral level and interactions at regional and multilateral fora have contributed to a higher degree of comfort and familiarity among the leaders, which in turn helped in imparting fresh dynamism in India’s relations with these countries. The high point in India’s contacts with the region was the visit of Prime Minister Dr. Manmohan Singh to Vientiane, Lao PDR to attend the third India- ASEAN Summit from 29-30 November 2004. From the other end, Prime Minister of Singapore Mr. Goh Chok Tong was the first Head of Government to be received by the UPA government. The Prime Ministers of New Zealand and Malaysia visited India during the year. Visit of New Zealand Prime Minister took place after nearly two decades and visit of Malaysian Prime Minister was of the longest duration as compared to his visits to other countries. On the margins of third India-ASEAN Summit, Prime Minister had bilateral meetings with President of Indonesia H.E. Mr. Sushilo Bambang Yudhoyono, Prime Minister of Australia H.E. John Howard and Prime Minister H.E. Mr. Lee Hsien Loong of Singapore. The Foreign Ministers of India and ASEAN met for the first time before the summit. At the Summit, “India-ASEAN Partnership for Peace, Progress and Shared Prosperity”was signed. External Affairs Minister attended a Special ASEAN Leaders’ Summit in the aftermath of the Earthquake and Tsunami hosted by the Indonesian President in Jakarta on 6 January 2005. Third India – ASEAN Business Summit was held in New Delhi on 19 October and in Chennai on 20-21 October 2004 witnessed impressive participation from all the ASEAN countries.
India-ASEAN car rally was flagged by Prime Minister at Guwahati on 22 November 2004 and by ASEAN leaders at Vientiane on 29 November 2004.The year saw fresh contacts with the leadership of South East Asian countries, which witnessed change of power i.e. Indonesia,
Malaysia and Singapore. A number of ministerial visits that took place during this period also helped in further consolidation of India’s relations with the region.
As far as the pacific region is concerned, India participated for the second time in the Post Forum Dialogue meetings with the PIF, in Samoa in August 2004. India reiterated its intention to assist in the development of the Pacific Island economies through economic and technical cooperation. India’s bilateral relations with countries of this region saw further consolidation and growth. India continues to attach due importance to countries of South East Asia and Pacific region as envisioned in our “Look East Policy” I & II”.