India's Neighbourhood-First Policy

  Sep 01, 2023

India's `Neighbourhood First` Policy:

Sri Lanka's Geopolitical Realignment After the Crisis

The crisis in Sri Lanka had ramifications beyond its borders, directly affecting the region's geopolitical dynamics, especially concerning Sri Lanka's relations with its neighbors, India and China.
1. India's Renewed Role: The crisis allowed India to mark its footprint more vividly in the regional landscape. Witnessing Sri Lanka's economic distress, India was quick to offer both financial aid and diplomatic backing, underlining its status as a formidable regional player.
2. Deepening of India-Sri Lanka Relations: India's timely intervention, both financially and diplomatically, bolstered its ties with Sri Lanka. High-level visits, like that of Sri Lankan President Ranil Wickremesinghe to India, spotlighted the shared aspiration for economic collaborations and enhanced connectivity.
3. Pushing Back China's Dominance: The crisis instigated a rethink in Sri Lanka about its over-reliance on China for infrastructural financing. India's robust participation provided an alternative, slightly reducing China's overarching influence on the island.
4. Collaborative International Support through Quad: India, capitalizing on its standing within the Quad, mobilized assistance for Sri Lanka. This collective support emphasized the Quad's commitment to regional stability and its ability to act as a counterweight to other major players.
5. Diplomatic Triumph: India's advocacy for Sri Lanka in major international platforms showcased its enhanced diplomatic prowess. It played a pivotal role in ensuring that Sri Lanka received necessary international financial support.
6. Augmented Bilateral Initiatives: As the dust settled post-crisis, India and Sri Lanka inked a Comprehensive Joint Vision Document, pledging to cooperate on infrastructural and investment-oriented initiatives.
7. Advocacy for Stronger Economic Integration: Given India's invaluable support during tumultuous times, voices in Sri Lanka increasingly championed for tighter economic association with India.
To summarize, the crisis enabled India to reinforce its commitment to regional prosperity and equilibrium. Consequently, Sri Lanka's geopolitical leanings tilted more favorably towards India, marking a renewed era of partnership and mutual trust.

India's Economic Lifeline to Sri Lanka

The economic tremors felt in Sri Lanka in 2022 accentuated India's potential and responsibility as a regional economic powerhouse. With Sri Lanka on the brink of a sovereign default, India acted as the financial beacon, extending an emergency package nearing $4 billion.

1. Composition of Assistance:

India's aid was well-rounded, encompassing currency swaps, bilateral credit lines, and rescheduling of loan repayments, aggregating to the colossal $4 billion assistance.

2. Motivation Behind the Move:

Several reasons motivated India's generous gesture:
Regional Stability: Primarily, India was keen on averting a neighboring crisis, ensuring regional peace and stability.
Neighborhood First Policy: India's proactive role in assisting other South Asian nations in financial straits reflects its broader policy outlook, with past instances including Maldives and Nepal.
Countering Chinese Influence: China, with its extensive economic involvement in Sri Lanka, loomed large. India's aid was also a strategic move to somewhat dilute China's predominant role.
Strategic Interests: The significance of ports like Colombo and the operations of Indian enterprises in Sri Lanka made the island nation strategically vital for India.
By the beginning of 2023, while China held a significant 20% of Sri Lanka's external debt, India's share was 5%.
In essence, the 2022 crisis underlined India's rising economic might in South Asia and its pivotal role in steering the region towards stability and growth.


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