Sri Lanka on Tuesday scrapped a deal to develop a major port terminal with India and Japan amid weeks-long protests by trade unions and opposition parties while India called on its neighbor to honor the agreement.
These developments follow a visit by India's External Affairs Minister, Subrahmanyam Jaishankar, who is reported to have laid down "unequivocal terms" for the ECT.
At a meeting with port trade unions in January, Sri Lanka's President Gotabaya Rajapaksa had said the plan was aimed at developing the ECT as an investment project.
Beijing took over Hambantota port in the south of the country in 2016 after Sri Lanka failed to keep up with debt repayments, and is involved in the construction and operation of a neighbouring port terminal in Colombo, as well as other critical infrastructure.
Prime Minister Narendra Modi congratulated his Sri Lankan counterpart Mahinda Rajapaksa on the occasion of the 73rd Anniversary of the Independence Day of Sri Lanka - which will be celebrated on February 4. It remains to be seen whether India and Japan will reconsider the offer for an alternate project, or prevail on the Rajapaksa government to rethink its decision.
"The commitment of the Government of Sri Lanka has been conveyed several times in the recent past, including at the leadership level.All sides should continue to abide by the existing understandings and commitment", the Indian spokesman added.
According to estimates, over 70 per cent of business at Colombo port is from ships in transit to the Indian coast, making it important for Sri Lanka, too. The Adani Group from India, along with Japanese companies, was to invest in the project expected to cost upto $700 million, as per official estimates. The group did not comment on queries mailed to it in the evening.
The Government today succumbed to pressure from trade unions on the Colombo port deal with India.
Despite hectic diplomatic engagement with Sri Lanka in the recent past, a key Indian project in the island nation now stands cancelled.
In Delhi, an official of the Japanese Embassy said the Japanese government was "looking into the details" of the announcement made by Mr. Mahinda Rajapaksa after a Cabinet meeting on Monday. When President Gotabaya Rajapaksa assured the protesters that only 49 per cent stake was being given, they cited his own poll manifesto that found fault with the 2019 agreement.
Last Thursday, 23 trade unions at the Colombo port, backed by over 220 unions across the country, announced an agitation against the project being given to "foreign" companies. "It is a win-win solution now", he said, referring to the WCT proposal.