Sri Lanka resumes negotiations with India on the East Terminal port of Colombo

Sri Lanka is continuing talks with India on the development of a container terminal in the Port of Colombo; information minister Bandula Gunewardene said as protests continued against port workers. "The last government signed a treaty with India," said Minister Gunewardene. "Becoming emotional or excited is not the policy of the President and this nation. Talks will fix problems. Whether it's the US, China or India, matters will be discussed at the diplomatic level with friendly countries”.

The last administration of Sri Lanka signed an agreement with India and Japan to complete the development of the partially built Colombo Port East Container Terminal through an operating company, with a loan from the port. With rising debt rates, however, top officials favoured a regular building and operating transition arrangement with investors investing in equity and assuming debt obligation.

Reports said Adani Ports of India and John Keells Holdings of Sri Lanka along with the Sri Lankan Ports Authority are a contender to complete the development as a BOT contract. A senior official said there would be a majority stake in Sri Lanka through SLPA and local investors. However, bids were called upon to build the port as a BOT deal with local and international consortia responding when the project halted when Ranil Wickremesinghe was Prime Minister.

But concerns remain about Sri Lankan's distinct claims and evaluations of 'selling of national properties' when it came to the straightforward, long-term transfer of Hambantota's ownership and control to China, and now Indian's restricted involvement in ECT. President Gotabaya Rajapaksa unilaterally declared in the run-up to his election last year that he would re-negotiate the Hambantota swap agreement if elected. Nonetheless, on taking office, he said he figured out it was a 'business offer' and nothing could do about it.

It sounded familiar to Sri Lankan watchers, who saw a similarity to rival Ranil Wickremesinghe unilaterally proposing to cancel the Colombo Port City agreement with China ahead of the 2015 presidential polls. It later settled for a changed version after becoming prime minister under newly elected President Maithripala Sirisena.

Away from the media glare, the two countries are holding talks for India to reschedule Sri Lanka's 900 million-dollar Indian debt, as Prime Minister Mahinda announced during his visit to India.

According to the economist and former minister, Harsh de Silva, the regime of President Gotabaya added LKR 1,000 billion (5.38 billion) to the national debt in the first four months of the current fiscal period, starting in January. The amount as mentioned earlier is relative to the predecessor's LKR 5,700 billion ($31 billion) in five years.

OSL Take: OSL Take: Sri Lanka and India boast of strong bilateral and trade ties that have been further bolstered by the free trade agreement (FTA). Sri Lankan businesses are, therefore given preferential treatment when engaging in business ventures in India. Local companies could use this benefit to form joint ventures/partnerships with Indian companies. Foreign businesses/investors looking at doing business with India could explore the possibility of setting up base in Sri Lanka to reach out to the Indian market.

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