Recently Chinese company has won a contract to set up hybrid wind and solar energy projects on 3 Sri Lankan islands off the northern Jaffna peninsula 45 kilometer from Rameswaram in Tamil Nadu.

  • The Asian Development Bank will fund the project, which will come up on Delft, Nainativu and Analativu, three islands in the Palk Strait off Jaffna peninsula.
China’s new Energy Project in Sri Lanka

The Islands

  • Delft is the largest of the three islands, is the closest to Rameswaram, Tamil Nadu, which lies to the island’s south west.
    • Between the two is Kachchativu, the tiny island that India ceded to Sri Lanka in the year 1974.
    • The waters around these islands are an area of contest and rivalry between Tamil Nadu and Jaffna fishers.
    • The matter has been on the bilateral agenda for decades.
    • Both India and Sri Lanka agreed to set up a Joint Working Group on Fisheries in the year 2016 between the Union Ministry of Agriculture and Farmers Welfare of India and Sri Lanka’s Ministry of Fisheries and Aquatic Resources Development as the mechanism to help find a permanent solution to the fishermen issue.
  • Sri Lanka’s Stand
    • The country cannot be blamed for this decision, because the project is backed by the Asian Development Bank, which has its “own procurement guidelines that should be followed by the borrower”.
  • India’s Concern
    • The project site’s proximity to the Indian coastline.
      • Chinese presence in the vicinity is not welcomed especially when India already has many unresolved issues with China.
      • This deal came at a time when India’s confrontation with China in Ladakh is yet to be resolved.
    • Recently Sri Lankan government cancelled the contract with India and Japan for the Eastern Container Terminal.
      • The tripartite agreement, signed by India, Japan and Sri Lanka, proposed to develop the Eastern Container Terminal, which is located at the newly expanded southern part of the Colombo Port.
      • For India, the Eastern Container Terminal deal was important as around 70 per cent of transhipment that takes place through it is India-linked. The Eastern Container Terminal is also considered more strategic than any other in Colombo Port.
  • India’s Stand
    • India had lodged a strong protest with the Sri Lankan government on the contract to the Chinese company.
      • In the year 2018, India voiced concern over China’s $300 million housing project for war-affected areas, accusing the Resettlement Ministry [of the former government] of holding an “opaque” bidding process.
        • The project was eventually dropped.

China’s Rising Influence in South Asia

  • Recent Initiative
    • By January 2021 China held its third multilateral dialogue virtually with countries from South Asia to take forward closer cooperation on fighting Covid-19 Pandemic and coordinating their economic agendas, reflecting a new approach in Beijing’s outreach to the region.
  • Other Initiatives
    • According to the American Enterprise Institute’s (AEI) China Global Investment Tracker, China has committed around $100 billion in the economies of Afghanistan, Bangladesh, Maldives, Pakistan, Nepal and Sri Lanka.
      • China is now the largest overseas investor in Pakistan, Maldives and Sri Lanka.
  • Concerns for India
    • Security Concerns
      • To Growing cooperation between Pakistan and China.
      • To Increasing nexus between Nepal and China.
      • Acceptance to China-Pakistan Economic Corridor (CPEC) by south asian countries.
    • Leadership Roles in South Asia
      • It shows increasing chinese presence in south asia and its acceptance by the countries as a torch bearer for the region which India wants for itself.
    • Economic Concerns
      • Over the past years, China has replaced India as the major trading partner of several South Asian nations.
      • For instance, the share of India’s trade with Maldives was 3.4 times that of China’s in the year 2008. But by 2018, China’s total trade with Maldives slightly exceeded that of India.
    • China’s trade with Bangladesh is now about twice that of India. China’s trade with Nepal and Sri Lanka still lags India’s trade with those countries but the gap has shrunk.


  • India does not have the economic capacity as China. Thus it should cooperate with China for the development of these countries such that fruits of development collectively reach South Asia. Further India should invest in countries where China falls short and maintain its good will in South Asia and prevent these nations from slipping off from India’s Influence.
  • Along with strongly condemning the plans for extension of the China-Pakistan Economic Corridor (CPEC), India also needs to focus more on its traditional and cultural ties to improve relations with its neighbours.

China’s new Energy Project in Sri Lanka China’s new Energy Project in Sri Lanka