What's New :

India-Sri Lanka agreement for Fintech connectivity

  • Published
    22nd Jul, 2023
Context

As the Sri Lankan President was on a two-day visit to India, several agreements were signed between both the countries.

  • The visit is significant as it was the first time a senior Sri Lankan leader visited India since Sri Lanka experienced a severe economic crisis last year.

Major-Points of Discussion:

  • Strengthen economic and strategic cooperation: During the visit, the primary focus of the discussions between Indian Prime Minister and Sri Lankan President was to strengthen economic and strategic cooperation between the two nations.
  • Increase Fintech connectivity: The Agreement signed to launch UPI in Sri Lanka to increase Fintech connectivity.
  • Expanding scope of land accessibility: India and Sri Lanka agreed to conduct feasibility studies on a petroleum pipeline and a land bridge connectivity project between the two countries.
  • On Fishermen Issue: Sri Lanka has promised to make amendments in their law regarding the fishing rights and territory.

India-Sri Lanka Fisherman Issue

  • The India-Sri Lanka fisherman is a long-standing dispute between the two over fishing rights in the Palk Strait and the Gulf of Mannar.
    • The Palk Strait is a narrow strip of water that separates the state of Tamil Nadu in India from the northern regions of Sri Lanka.
  • Both Indian and Sri Lankan fishermen have been fishing in the Palk Bay Straits for several years but the maritime agreements signed between the two sides in 1974 and 1976 led to the demarcation of the International Maritime Boundary Line (IMBL).
  • The two treaties between the two countries led to the Palk Bay Strait connecting India and Sri Lanka being declared a "two-nation pond" under the United Nations Convention on the Law of the Sea rules.
  • This led to the ban on fishing in international waters of the two countries.


India’s view on deal with Sri Lanka:

  • Sri Lanka has an important place in both India's 'Neighbourhood First' policy and 'SAGAR' vision.
  • India wants to expand the scope of digital payments between both the countries, bringing the use of UPI and similar tools to the forefront.

'Neighbourhood First' policy:

  • Neighbourhood First Policy of India is a core component of India's foreign policy.
  • It focuses on peaceful relations and collaborative synergetic co-development with its South Asian neighbors of the Indian subcontinent.
  • This policy creates new avenues as well as leverages existing regional cooperation initiatives, such as SAARC, SASEC, BBIN, and BIMSTEC.
  • It compliments India's Look East policy focused on Southeast Asia and Look West Policy focused on Middle East.

'SAGAR' vision:

  • SAGAR stands for “Security and Growth for All in the Region” is India’s policy or doctrine of maritime cooperation in the Indian Ocean region.
  • The policy was first announced by Prime Minister Narendra Modi in 2015.

Sri Lanka and its Strategic significance:

  • Strategic Location: Sri Lanka occupies a geo-strategically important position as about two-thirds of the world’s oil and half of the world’s container transportation passes through the south of Sri Lanka.
  • Therefore, Sri Lanka, which is strategically located, stands out in terms of the security of maritime communication and trade lines in the Indian Ocean.
  • Positioned as an Island Nation: On the other hand, Sri Lanka is home to ports that have the potential to become important maritime hubs in the Indian Ocean.
  • Economic Crisis: The crisis that is hampering Sri Lanka’s economic and political stability could have serious repercussions on India.
  • Because Sri Lanka’s economic and therefore political dependence on China has led to an increase in Chinese influence in the country.

Conclusion:

On the radar of major powers such as Japan, the US, and the UK, as well as China and India, Sri Lanka has become a hub in the Indian Ocean. For this reason, the any support that Sri Lanka will receive from India and other countries is considered by many experts as a balance against China. On the other hand, it is also claimed that Sri Lanka could use its relations with China and its strategic position and importance to extract economic support and concessions from India. The adoption of such a strategy for the protection of a small and economically crisis country is considered quite rational.

GS Mains Classes GS Classes 2024 GS Classes 2024 UPSC Study Material

Verifying, please be patient.

Our Centers

DELHI (Karol Bagh)

GS SCORE, 1B, Second Floor, Pusa Road, Karol Bagh, New Delhi - 110005 (Beside Karol Bagh Metro Station Gate No. 8)

Get directions on Google Maps

BHUBANESWAR (Jaydev Vihar)

GS SCORE, Plot No.2298, Jaydev Vihar Square, Near HCG Day Care, BBSR - 751013

Get directions on Google Maps

LUCKNOW (Aliganj)

GS SCORE, 2nd Floor, B-33, Sangam Chauraha, Sector H, Aliganj, Lucknow, UP - 226024

Get directions on Google Maps

Enquire Now