India and China’s push for influence in Sri Lanka

India’s intervention in a Chinese-funded hybrid energy project in the islands off Sri Lanka’s northernmost peninsula, Jaffna, shows it is struggling to assert itself in the Indian Ocean, Jeevethan Selvachandran writes.

In an increasingly tense atmophere for the countries of the Indian Ocean, Sri Lanka, on 18 January 2021, formally approved a $12 million Chinese renewable energy project on the islands scattered just north of its Jaffna Peninsula.

How did this affect the geopolitical situation in the Indian Ocean?

Well, India strongly objected the decision to award projects to China in Jaffna, and in December 2021, China suspended the project citing ‘security concerns of a third party’. India offered a grant for 75 per cent of its price, $12 million, so that Sri Lanka wouldn’t have to rely on Chinese firm Sino Soar to finance and operate the project, and were successful.

In addition to Sri Lanka, China is also expanding its influence in the Indian Ocean by establishing maritime partnerships with Seychelles, Mauritius, Maldives, Bangladesh, Myanmar, and countries in east Africa, and is undertaking similar projects in islands north of Maldives.

The suspended project isn’t the first instance of a Chinese role in infrastructure projects in Jaffna. In 2018, India voiced concern about $300 million housing project for war-affected areas funded by China. That project stalled too, and was eventually dropped.

But why are China and India competing in this way in Sri Lanka? And, for that matter, the rest of the Indian Ocean?

More on this: India is making inroads in Maldives, but China stays on top

Located at the crossroads of global shipping lanes, the island nation is vital for both China and India. Roughly 80 per cent of China’s of energy imports come by sea from the Middle East through the Indian Ocean, and 90 per cent of India’s trade is carried by sea.

Sri Lanka is located at the centre of the Indian Ocean, linking the Persian Gulf with the Malacca Strait, and acting as a conduit for global supply chains. It is only natural that it attract development and security interest from its larger neighbours.

Of course, due to sheer proximity, the country is of particular significance to India. Despite its suspension, Sri Lanka’s willingness to accept China’s original offer for this project may be a sign India is struggling to keep Chinese-funded projects out of its own ‘backyard’.

A project in the islands north of Jaffna is especially significant. Previously, Chinese-funded development was mainly restricted to southern Sri Lanka, but it is now expanding to the Tamil-dominated northeastern region. This has been promoted by the Rajapaksa government despite the disapproval of much of the Tamil community.

As a result, China’s influence in Sri Lanka is expanding more rapidly than that of India, Japan, and the United States. This has led Tamil leaders to question whether the nation’s sovereignty is threatened by political colonisation.

More on this: China’s Indian Ocean power play

Indeed, China already holds a 99 year lease of Hambantota Port and state-owned enterprise China Merchants Group is part of a 35 year joint venture to build, operate, and develop Colombo International Container Terminal.

With Chinese investment now consisting of more than 14 per cent of the island nation’s economy, it’s clear the country’s the geostrategic outlook has been fundamentally altered and there are credible allegations of Sri Lanka being caught in a Chinese ‘debt-trap’.

This trend is what justifies India’s objection to Chinese projects in Jaffna. By favouring China at first, the Rajapaksa administration has once again marginalised India’s role in the Indian Ocean’s development.

While it might be alleged that India has brought a patronising attitude towards other states in the region and paved the way for growing Chinese influence, a lack of a visionary foreign policy is the more important factor in India’s failures. It’s here that China is succeeding.

In spite of being touted as an influential actor in the future, India is still far from wielding the influence of the United States and China. Why? Because in comparison, India lacks authenticity, strength, and even clear values. Rather than showcasing a vision for the future of the region, it seems to oscillate between bandwagoning and balancing.

Jaffna is an issue very close to home. An expanding Chinese presence there could threaten hitherto unaffected South India if China opted to use a project like this as a platform for the expansion of military activity in the Indian Ocean.

It may be off the hook this time, but until it can find a stronger solution to growing Chinese influence in the region, India’s only option is to think creatively and look to build the authenticity and strength it seems to lack. Otherwise it risks losing even more ground.