India’s concerns over China’s rising influence in Sri Lanka grow with progress of US$1.4 billion port city project

New legislation governing Colombo Port City was passed last month amid local opposition to the project funded by a Chinese state-owned firm

Ex-diplomat says India cannot match China’s resources to build infrastructure in countries such as Sri Lanka, which has dismissed concerns about ‘debt traps’

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The construction site of the Colombo Port City project. Photo: Xinhua

Published: 9:30pm, 8 Jun 2021Updated: 10:19pm, 8 Jun 2021

India’s concerns over China’s growing influence in Sri Lanka have been exacerbated after the approval of controversial legislation governing a Chinese-funded US$1.4 billion project to build a special economic zone (SEZ) next to the main port in Colombo.

The Colombo Port City Economic Commission Bill was passed by Sri Lanka’s 225-member parliament last month. Among other things, it empowers a seven-member body appointed by the president with complete control over all decisions related to the Colombo Port City zone.

Critics are concerned that without parliament’s oversight, the project would be administered largely according to the wishes of the SEZ’s major investor, CHEC Port City Colombo, a unit of state-owned China Communications Construction Company.

CHEC Port City Colombo has the right to use just under one-quarter, or 62 hectares (153 acres), of the land on a 99-year lease from the Sri Lankan government, according to the project’s website.

The port city development is the third major infrastructure project in Sri Lanka backed by China, and the Indian government has grown increasingly concerned that Beijing is using billions of dollars in funding to expand its geopolitical reach in the Indian Ocean area, which has traditionally been regarded as within India’s sphere of influence, retired Indian foreign secretary Kanwal Sibal said.

Sri Lanka has also been a crucial staging post for much of the cargo coming in and out of India, and although Sri Lanka insists it has an “India first policy”, New Delhi’s concerns remain.

“These are diplomatic statements to disarm India diplomatically,” Sibal said. “India is losing out not only in Sri Lanka but also in Nepal.”