Sri Lanka is intensifying efforts to deepen economic cooperation with India through a new wave of investments in technology, manufacturing, logistics and digital finance, following recent discussions between Industry and Entrepreneurship Development Minister Sunil Handunneththi and representatives of the Indian CEO Forum.
The discussions come at a crucial moment for Sri Lanka’s fragile post-crisis economy. After the island’s unprecedented economic collapse in 2022, Colombo has increasingly turned to regional partners for investment, with India emerging as one of the country’s most influential economic stakeholders. Officials believe closer ties with Indian businesses could accelerate industrial recovery, create employment and modernise Sri Lanka’s ageing infrastructure.
Among the proposals discussed were five priority investment projects intended to fast-track industrial development, alongside plans for joint ventures in pharmaceuticals, apparel, electronics and fintech. One of the most ambitious ideas was the proposed Bengaluru–Colombo technology entrepreneurship corridor, aimed at connecting Sri Lanka’s growing startup ecosystem with India’s globally recognised innovation hub in Bengaluru.
The move reflects a broader trend of rising Indian investment in Sri Lanka. The largest ongoing Indian-backed project remains the Colombo West International Terminal, developed by India’s Adani Ports in partnership with John Keells Holdings and the Sri Lanka Ports Authority. The $800 million deep-water terminal began operations in 2025 and is expected to handle 3.2 million containers annually, significantly expanding Colombo’s role as a South Asian transshipment hub.
According to Sri Lanka’s Board of Investment, the Colombo terminal project became the country’s single largest foreign direct investment contributor during the first nine months of 2025, injecting approximately $229 million into the economy.
India’s influence is also expanding in the digital payments sector. India’s Unified Payments Interface (UPI), operated through collaborations with LankaPay, is rapidly gaining acceptance across Sri Lanka’s tourism and retail sectors. Analysts say the system could simplify transactions for Indian tourists, who now represent one of the island’s largest visitor groups, while also accelerating Sri Lanka’s transition towards a cashless economy.
Supporters argue these initiatives could provide Sri Lanka with badly needed foreign exchange, technology transfer and employment opportunities. Improved port infrastructure could strengthen Colombo’s strategic role in Indian Ocean trade, while manufacturing partnerships may reduce import dependence and boost exports.
However, critics warn of growing economic dependence on India. Concerns have also emerged over transparency, sovereignty and geopolitical balancing, especially as Sri Lanka attempts to maintain strategic relations with both India and China. The controversy surrounding Adani Group’s suspended renewable energy ventures and international corruption allegations has further fuelled public debate over governance and accountability.
Economists note that the long-term success of Indian investments will ultimately depend on transparent agreements, environmental safeguards and whether ordinary Sri Lankans genuinely benefit through jobs, technology access and sustainable economic growth.
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