Subject: International Relations

India's deep-rooted relationship with Sri Lanka, spanning millennia of shared cultural, religious, and economic ties, was significantly demonstrated during Sri Lanka's recent economic crisis of 2022-23, where India emerged as a crucial partner in its neighbor's recovery.

India's Multifaceted Support During Crisis

• Financial Assistance: India extended comprehensive support worth USD 4 billion, including:

  • A USD 500 million line of credit for petroleum purchases.
  • A USD 400 million currency swap facility.
  • A USD 1 billion credit line for essential commodities like food and medicine.

• Diplomatic Support:

  • India played a pivotal role in facilitating Sri Lanka's IMF bailout package by providing crucial financing assurances.
  • Demonstrated leadership in debt restructuring negotiations, despite holding a relatively smaller share of Sri Lanka's debt.

Strategic Dimensions of India's Support

• Neighborhood First Policy:

  • India's swift response aligned with its "Neighborhood First" foreign policy doctrine.
  • Strengthened bilateral ties through economic and diplomatic engagement.

• Regional Security:

  • Helped prevent potential regional instability arising from Sri Lanka's economic collapse.
  • Countered growing Chinese influence in the Indian Ocean Region.

Long-term Impact and Benefits

• Economic Integration:

  • Enhanced bilateral trade and investment opportunities.
  • Strengthened currency swap arrangements and financial cooperation.

• Strategic Partnership:

  • Reinforced India's position as a reliable partner in times of crisis.
  • Demonstrated India's capacity as a regional stabilizer.

India's comprehensive support to Sri Lanka during its economic crisis exemplifies the age-old friendship between the two nations and strengthens their bilateral relationship. This assistance, coupled with initiatives like Project Sagar and the Security and Growth for All in the Region (SAGAR) doctrine, reinforces India's commitment to regional stability and prosperity in the Indian Ocean Region.