India has agreed to develop three Sri Lankan wind farms on an island between the two countries after a win in New Delhi after acquiring the project from a Chinese company, officials said Tuesday.
New Delhi has long been concerned about China’s growing influence in the region. In 2020, 20 Indian and 4 Chinese soldiers were killed in fighting on the disputed Himalayan border.
A $12 million project to build wind turbines on three small islands in Palk Strait, between southern India and Sri Lanka, was awarded to a Chinese company in 2019 with funding from the Asian Development Bank (ADB).
However, work did not begin after India protested Chinese activity near the coast, and projects on the islands of Nainativu, Analaitivu and Delft were later scrapped.
A joint statement issued Tuesday after the Indian foreign ministers visited Colombo said a memorandum of understanding had been signed to build the facility. Sri Lankan officials said India had agreed to provide the funds on behalf of the ADB.
Meanwhile, Indian officials said they could not confirm whether the new pact’s factories should be built on the same island designated for the Chinese project. Power and other details for the project were not available.
Last week, China’s ambassador to Sri Lanka, Qi Zhenhong, warned that the Chinese government would complain about the project suspension and send a negative signal to potential foreign investors.
India is known for questioning China’s growing political and economic influence in a South Asian country strategically located at the southern tip of the vast Indian subcontinent.
“kind of [a] “It’s a real victory for India,” said Lynn Ockersz, Sri Lanka’s senior journalist and foreign relations analyst.
He said he would be “in a good position to influence Sri Lanka in terms of policy issues affecting India overall,” he said.
China and India have been competing for key infrastructure in Sri Lanka, which is experiencing the worst economic crisis since independence from Britain in 1948.
Colombo has requested more loans from both countries to increase its foreign exchange reserves and import essentials, including food, fuel and medicines.
India provided a $1 billion line of credit for necessities, following previously spending $500 billion on fuel. China is considering a request for $2.5 billion in economic aid to Sri Lanka.
Infrastructure projects built with Chinese loans but failing to make money are being blamed for the debt crisis. Sri Lanka’s foreign exchange reserves are shrinking, but it has to repay $7 billion in foreign debt this year.
China has rejected a debt restructuring request.
Beijing has invested billions of dollars to build a port, airport, road and port city on reclaimed land near the port of Colombo, which the Sri Lankan government aims to develop into a financial city.
The Sri Lankan government has abandoned a plan previously allowing full Chinese ownership to land in the port city of Colombo and leased 62 hectares (153 acres) over 99 years.