By Shivam Patel and Uditha Jayasinghe
NEW DELHI (Reuters) – India is looking to strengthen energy and defence ties with Sri Lanka and promote investments during Prime Minister Narendra Modi’s two-day state visit to the island nation, where New Delhi competes with China for greater influence.
Modi, set to arrive on Friday evening, will be the first global leader hosted by Sri Lankan President Anura Kumara Dissanayake after he took office in September.
Sri Lanka is keen to attract foreign investment to stabilise its economy after a financial crisis in 2022, during which India provided $4 billion in financial assistance.
India is also one of Sri Lanka’s key bilateral lenders, which agreed to restructure about $1.36 billion in loans after the island nation defaulted on its debt in May 2022.
“Prime Minister Modi’s visit aims to strengthen the longstanding ties between Sri Lanka and India,” the Sri Lankan president’s office said in a statement.
The visit will see pacts signed on key sectors such as energy, digitalisation, security, healthcare, as well as agreements related to India’s debt restructuring assistance for Sri Lanka, it added.
At their first meeting in New Delhi in December, the leaders discussed investments in Sri Lanka and plans for India to supply liquefied natural gas to Sri Lanka and help link power grids.
The talks also featured development of a regional energy and industrial hub in eastern Trincomalee. In January, Dissanayake said the two were in talks on building an oil refinery there as a joint venture focusing on exports, domestic media said.
When completed, the project would stoke competition between India and China, whose state energy firm Sinopec has signed a deal to build a $3.2-billion oil refinery in Sri Lanka’s southern port city of Hambantota.
New Delhi-run Indian Oil Corp is already the second biggest fuel supplier after state-owned Ceylon Petroleum Corp.
India’s foreign ministry did not comment on whether the proposed Trincomalee refinery will figure in this week’s talks.
It told reporters in a briefing ahead of the visit that Modi would join in a ceremony to break ground for a 120-megawatt solar power project of the Ceylon Electricity Board and India’s National Thermal Power Corporation.
The ministry said it hoped to wrap up an agreement on defence cooperation with Sri Lanka. December’s discussions had envisioned provision of arms to Sri Lanka to boost its defence capability.
(Reporting by Shivam Patel in New Delhi; Editing by Clarence Fernandez)
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