India Takes On China, To Set Up Mega Energy Project In Sri Lanka

India is stepping up its presence in Sri Lanka to counter China’s growing influence by launching key energy and defence projects in partnership with the United Arab Emirates (UAE).

During Prime Minister Narendra Modi’s recent visit to Colombo, India, the UAE, and Sri Lanka signed a major agreement to develop an energy hub in Trincomalee, a strategic port city on Sri Lanka’s eastern coast. The move is seen as a direct response to China’s $3.2 billion oil refinery deal in Hambantota, signed with Chinese state-owned firm Sinopec.

Foreign Secretary Vikram Misri said the UAE was a “strategic partner for India in the energy space,” making it an ideal collaborator for this new regional initiative.

Also Read: Sri Lanka Promises PM Modi: No Territory Will Be Used Against India's Interests

India’s Growing Presence In Sri Lanka

The Trincomalee hub will include a multi-product pipeline and may use a World War II-era oil tank farm, partly operated by the Sri Lankan unit of Indian Oil Corporation.

India’s growing presence in Sri Lanka comes as Colombo tries to recover from a severe financial crisis. India was the first country to step in during the crisis, providing $4 billion in support. Now, New Delhi has also helped Sri Lanka finalize a debt restructuring process involving loans worth $1.36 billion from Indian banks.

However, India’s efforts go beyond energy and finance.

India and Sri Lanka Defence Deal

In a major move to deepen strategic ties, India and Sri Lanka signed a landmark defence cooperation agreement. After meeting with PM Modi, Sri Lankan President Anura Kumara Dissanayake assured, “Sri Lanka will not allow its territory to be used in any manner that could threaten India’s security interests.”

He also thanked India for its timely and continued support during Sri Lanka’s economic collapse.

The defence pact is widely seen as part of India’s larger effort to push back against China’s growing footprint in the Indian Ocean. China already controls the Hambantota Port on a 99-year lease, raising concerns in New Delhi over Beijing’s long-term military and economic intentions.

To further boost its influence, India also launched a $100 million solar power project with Sri Lanka and signed agreements on digitalisation, power grid connectivity, healthcare, and security.

By strengthening economic, energy, and defence ties, India is making it clear that it intends to remain Sri Lanka’s closest and most reliable partner — and limit China’s influence in the region.