By in­vest­ing in Sri Lanka’s mar­itime in­fra­struc­ture and re­gional con­nec­tiv­ity, In­dia can have a stake in the devel­op­ment of South Asian mar­itime trade.

In­dia and Sri Lanka are fo­cus­ing on im­prov­ing free move­ment of trade be­tween the nations. By in­vest­ing in Sri Lanka’s mar­itime in­fra­struc­ture and re­gional con­nec­tiv­ity, In­dia can have a stake in the devel­op­ment of South Asian mar­itime trade

Maritime Gateway - - Contents - By Deepika Ami­rapu

Early this year in Jan­uary, the is­land na­tion Sri Lanka made head­lines for pos­i­tive po­lit­i­cal devel­op­ment. It was the be­gin­ning of the third year of the Pres­i­dent Maithri­pala Sirisena’s five-year term. In the two years of his Pres­i­dency, much was achieved to strengthen democ­racy and em­power the ju­di­cial sys­tem in the coun­try. Now per­haps for the first time in Sri Lanka’s con­tem­po­rary his­tory, the fu­ture holds more prom­ise than doubt. The Pres­i­dent and his men also en­sured Lanka did well in the three ar­eas the coun­try is of­ten re­ferred to – tea, cricket and mar­itime trade.

While the first two are cer­tainly a de­light to par­take and watch, mar­itime trade has been the one bone of con­tention lead­ing to some min­is­te­rial ex­its be­cause of am­bi­gu­ity in deal­ing with the Dragon. China has been a com­plex chal­lenge for the is­land na­tion that is deep in debt and yet needs to make truce be­tween devel­op­ment and se­cur­ing the mar­itime in­ter­ests of the In­dian Ocean Re­gion, or IOR. One of the counts that made Sirisena’s as­cen­sion to the Pres­i­dent’s seat easy was his prom­ise to con­trol the Chi­nese ag­gres­sion in many sec­tors. How­ever, the 2016 deal ac­cord­ing 80 per cent stake to China Mer­chants Port Hold­ings (Cm­port) in the Ham­ban­tota Port was crit­i­cised and forced Sri Lanka to re­con­sider its po­si­tion.

In Au­gust, Sri Lanka tried to cor­rect all the wrongs in this deal by re­vis­ing it and re­strict­ing the Chi­nese hold­ing to 70 per­cent. The pact lim­its Ch­port’s role in run­ning com­mer­cial op­er­a­tions by split­ting the ad­min­is­tra­tive func­tions be­tween two com­pa­nies. Colombo has also en­sured that the port will not be used for mil­i­tary pur­poses. As per ex­ist­ing port man­age­ment norms, the com­pany that con­trols op­er­a­tions takes de­ci­sions on how ships must en­ter and leave har­bour. At Ham­ban­tota, HIPS’ right to con­trol war­ship move­ments may re­sult in a clash of au­thor­ity with Cm­port, the ma­jor­ity stake­holder.

It is es­ti­mated that, by 2030, Asia will sur­pass North Amer­ica and Europe com­bined in global power based on gross do­mes­tic prod­uct (GDP), pop­u­la­tion size, mil­i­tary spend­ing and tech­no­log­i­cal in­vest­ments. The busy Eastwest ship­ping route passes just six to ten nau­ti­cal miles south of the is­land with more than60,000 ships ply­ing this route an­nu­ally car­ry­ing two-thirds of global pe­tro­leum, half the sup­ply of con­tainer cargo and more. Thus, Sri Lanka’s sit­u­a­tion in the nau­ti­cal cor­ri­dor be­tween the East and West is not only of im­por­tance from a geostrate­gic per­spec­tive but also from a mar­itime, eco­nom­ics and se­cu­rity per­spec­tive.

En­ter In­dia

In­dia and Sri Lanka hope to fi­nalise Indo-sri Lanka Eco­nomic and Tech­nol­ogy Co­op­er­a­tive Agree­ment (ETCA) by end of 2017. The ETCA will en­hance the scope of In­dia and Sri Lanka’s FTA to ex­tend freer move­ment of goods and ser­vices, with the added em­pha­sis of co­op­er­a­tion on devel­op­ment of tech­nol­ogy and in­vest­ment.

Se­condly, In­dia should also ac­tively con­trib­ute to Sri Lanka’s in­fra­struc­ture devel­op­ment. Adding to the IOR’S pearl in bet­ter­ing its mar­itime in­fra­struc­ture would be seen as es­sen­tial to achiev­ing its na­tional devel­op­ment goals. More specif­i­cally, Modi’s ad­min­is­tra­tion should en­cour­age pub­lic-pri­vate part­ner­ships and gov­ern­ment-to­gov­ern­ment in­vest­ments in In­dia’s neigh­bor­hood, be­yond con­cerns about China. Ac­cord­ing to the World Bank and Asian Devel­op­ment Bank, South Asia is one of the least in­te­grated re­gions in the world. By in­vest­ing in Sri Lanka’s mar­itime in­fra­struc­ture and re­gional con­nec­tiv­ity, In­dia is en­hanc­ing its own se­cu­rity.

In March this year, Sri Lanka’s For­mer Min­is­ter for Ship­ping, Ar­juna Ranatunga said, “Colombo, Trin­co­ma­lee and Kanke­san­thu­rai – these are the three ports where In­dia could col­lab­o­rate for devel­op­ment.” Ac­cord­ing to the Min­is­ter, the coun­try is look­ing for an Asian sub-con­ti­nent in­vestor. In­dian pri­vate players should col­lab­o­rate with the Sri Lankan Port Devel­op­ment Au­thor­ity to de­velop ports in Sri Lanka. CONCOR has formed a con­sor­tium with APM Ter­mi­nals B.V., John Keells Hold­ings and Maersk Line to bid for the devel­op­ment of East Con­tainer Ter­mi­nal in Colombo. The to­tal pro­ject value is likely to be about $550-600 mil­lion. This must be pur­sued for In­dia’s in­tent to play a ma­jor role in the IOR to be taken se­ri­ously.

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