India, Sri Lanka sign agreement for $318 mn line of credit

The Dollar Business Bureau

India on Tuesday signed a pact with Sri Lanka for a $318 million line of credit for developing the railway sector of island nation, according to officials.

RHS Samaratunga, Secretary in the Ministry of Finance and Mass Media of Sri Lanka, and David Rasquinha, Managing Director of Export Import Bank of India in Colombo signed the agreement.

Prime Minister Narendra Modi, during his first visit to the island nation in 2015, had announced a $318 million line of credit for development of railway sector of the country.

The visit was the first standalone bilateral visit since 1987 by an Indian prime minister and had come in the wake of rising presence of China in the Indian Ocean country.

China has been doing heavy investments in Sri Lanka, mainly for the development of ports that could possibly be used by its navy as a base, although Beijing says these investments are a part of its One Belt and One Road (OBOR) initiative that is aimed at linking it with the Europe and Africa through the Indian Ocean.

India has given four lines of credit amounting to $966 million, to its neighbour for the development of its railway sector.

These lines of credit have been utilised for improving the northern and southern railway lines and for procuring rolling stocks by the Sri Lankan Railways.

Ministry of Transport of Sri Lanka has said that improving transportation facilities for the people is urgently required for attracting passengers towards the railways, a cost-effective mode of transportation.

India has been a key development partner of Sri Lanka in South Asia for over 40 years. In the past few years, India’s foreign direct investment (FDI) into Sri Lanka has increased considerably.

Currently, India’s development assistance to Sri Lanka is primarily aimed at improvement of infrastructure, healthcare, education, livelihood development and capacity building.