The visit by Commerce and Industries Minister Anand Sharma to Sri Lanka over the weekend to inaugurate the India Show, and participate in the India-Sri Lanka CEOs’ forum thereafter, is a measure of the distance both countries have travelled since the India-Sri Lanka accord was signed 25 years ago this July.
Sharma promised India would set up an engineering and manufacturing special economic zone and a skills training institute in the eastern port city of Trincomalee, besides a pharmaceuticals manufacturing hub, all of which could become part of the supply chain into the Indian economy. He also offered to upgrade Sri Lanka’s ports, including the Colombo port, while ONGC Videsh Ltd proposed joint oil and gas explorations and setting up an oil refinery.
In meetings with his Sri Lankan counterpart, Rishard Baithudeen, as well as Basil Rajapaksa, Development minister and brother of the Sri Lankan president, Sharma offered preferential access for Sri Lankan goods, hoping to kickstart negotiations for the Comprehensive Economic Partnership Agreement (CEPA) that has been languishing because some Sri Lankan companies are wary it could open the way for an invasion of Indian goods.
“We are not seeking reciprocity,” Sharma told journalists in Colombo, aware that the low volume of trade, at $4.8 billion annually, has given rise to complaints about Sri Lankan goods being shut out of the Indian market. “We will ensure that whatever Sri Lanka exports to India, comes in without any difficulty.”
Sharma’s visit may be considered the political equivalent of applying balm on what has become an extremely fractious relationship since India voted against Sri Lanka at the Human Rights Council in Geneva in March. Delhi’s vote was conditioned on the belief that Colombo had not done enough to reach out to the large Tamil community in the aftermath of the civil war that ended in 2009, and reconcile the population into the national mainstream.
BJP leader Sushma Swaraj and National Security Adviser Shiv Shanker Menon have travelled to Sri Lanka since the March vote, but Sharma is the first minister from the UPA government to make economic overtures that are really political gestures.
Sharma heard both Rajapaksa and Baithudeen complain about the shortcomings of the India-Sri Lanka free trade agreement, and how despite the fact that Indian exports had increased by 70 per cent in 2011 — from $2.5 million to $4.3 billion — Sri Lankan exports to India had only grown by 16.8 per cent, from $466 million to $521 million.
It has now been decided to appoint two committees, to study the FTA and the CEPA, which will meet in three months to address concerns from both sides.
Sharma’s weekend visit is, in fact, an extension of the strategy the government has, with considerable success, employed with Pakistan over the past year, which is to use economics to improve bilateral political relations. This past week India confirmed it was ready to welcome investment from Pakistan and the National Bank of Pakistan announced it would clear the setting up of branches in several Indian cities.
With Sri Lanka, the problem is very different. The southern island nation was the first country with which India signed a free trade agreement in 2000, in the face of much opposition from several Indian sectors including textiles, rubber, tea, coconut and copra.
In the decade since, Sri Lanka’s civil war against the LTTE as well as politics in Tamil Nadu first intervened to distract from the task at hand and then cloud the bilateral relationship. Although India refused to censure the Mahinda Rajapaksa government for its violations against Tamil civilians in the last leg of the civil war in mid-2009, its vote against Colombo in March 2012 led to considerable public condemnation inside Sri Lanka.
Rajapaksa’s presidential secretary Lalith Weeratunge accused India, at a book reading in May, of trying to dismember Sri Lanka by sending the IPKF in 1987. Meanwhile, Colombo voted against an Indian candidate who sought election at the International Court of Justice.
But analysts say that the Rajapakse government has begun to realise that its public tirade against India can become counter-productive especially as India, along with Spain and Benin, has been asked by the UN to oversee Sri Lanka’s report to the UN Human Rights Council in November.
Menon’s visit in late June was to press Rajapaksa to implement the 13th amendment to its constitution that Sri Lanka passed 25 years ago — in the wake of the India-Sri Lanka accord — which allows the Tamil-majority north and east to form provincial councils, hold elections and separate the police from the army.
With Anand Sharma now following Menon to Sri Lanka, India is hoping that the carrot of opening up the economy will persuade Rajapaksa to take political steps to mainstream the minority Tamils. This is expected to have a beneficial effect on Tamil Nadu politics at home.