India's Lifeline to Sri Lanka

How India provided around 4 billion dollars in credit lines, currency swaps and supplies during Sri Lanka's 2022 crisis, and the strategic and economic ties between the two.

During the 2022 crisis, India was Sri Lanka’s largest supporter.

India’s aid

Around 4 billion dollars in support in 2022:
- Credit lines for fuel, food and medicine.
- Currency swap and deferral of Asian Clearing Union payments.
India was among the first creditors to provide financing assurances for the IMF programme in 2023.

Trade ties

India is one of Sri Lanka’s largest trading partners.
The India-Sri Lanka Free Trade Agreement has been in force since 2000.

Investment

Indian firms invest in energy, ports and tourism.
Projects include renewable energy in the north and the Colombo port’s West Container Terminal with Adani.

Strategy

India sees Sri Lanka as key to its neighbourhood first policy, partly balancing China’s influence.

Connectivity

Proposals for power grid links and ferry services have advanced.

The fuel shipment

In 2022, Indian credit lines paid for fuel shipments that eased Sri Lanka's queues, buying time before the IMF deal.

Thinking only the IMF helped Sri Lanka

India provided about 4 billion dollars in early support.

Key takeaways

India gave about 4 billion dollars of support in 2022.
Support included credit lines and currency swaps.
An India-Sri Lanka FTA has existed since 2000.
India sees Sri Lanka as strategically important.