Editorial: Shaping up South Asia ties

India is getting its act together in South Asia, albeit one step at a time. A significant breakthrough was achieved during Prime Minister Narendra Modi’s visit to Sri Lanka. The two nations have signed a major defence cooperation agreement, which is likely to foster stronger ties that go beyond defence. It was also a symbolic assertion of the ties between the two countries and possibly a return to the good old days when Sri Lanka leaned more towards its closest neighbour for defence and trade. For India, the island nation is the closest maritime neighbour and, therefore, an integral part of India’s Neighbourhood First Policy and Vision SAGAR. Somewhere along the way, China began to gain perceptibly more influence in Colombo and in the ensuing turf war, India for a moment appeared to be struggling to contain the expanding Chinese footprint.

The situation is now becoming favourable to India. There’s pressure on the new Sri Lankan government to seek foreign investment to bolster its financial situation, which took a beating during the 2022 financial crisis. In an act of reciprocation, it would naturally turn to India, which had stepped in with a $4 billion food and financial assistance package to shore up the country’s finances and ensure food security. To sweeten the deal, India had converted loans to the tune of over $100 million into grants. In a bilateral debt restructuring agreement, to ease the financial burden and help improve liquidity for developmental purposes, India decided to lower interest rates and give multi-sectoral grant assistance to the Eastern Province.

There is much to read between the lines in the signing of a tripartite agreement between India, Sri Lanka and the UAE to develop an energy hub in Trincomalee, which is of vital strategic interest to India. The pact is obviously in response to Chinese international petroleum corporation Sinopec’s deal to construct a $3.7 billion oil refinery in Hambantota, wherein the port is managed by China Merchants Port Holdings.

The NDA-3 government has the unenviable task of working on the ties with SAARC nations, as China has been aggressively pursuing them in recent years. For a while, it seemed like India was losing ground to China, which was befriending countries like Nepal, Bangladesh, and Maldives, which were disenchanted with India. The NDA government and Prime Minister Narendra Modi himself have to reach out to the neighbours with a sense of urgency as the world is entering a period of trade and geopolitical uncertainty.

Another aspect is the tightrope walk India had to do in containing Chinese influence without altogether antagonizing it. With the beginning of the Trump presidency, global politics has been in a state of flux. The triggering of a tariff war could spin out of control and disrupt not only trade relations but also global security arrangements.

Traditional rivals like Japan, China and South Korea were seen coming together, indicating the possibility of realignments which were hitherto thought unlikely, if not impossible. India needs to be open-minded and nimble – not be dogmatic about old friends and enemies while being nimble in pursuing and cementing relationships that could have weakened or been relegated to a lower priority in the past. Prime Minister Modi’s much-publicized personal diplomacy skills and India’s soft power will be put to the test, and in this critical game, winning can be the only option.