Defence

EXPLAINER: Implications of Modi’s narrow election victory for Sri Lanka

Shihar Aneez

Saturday June 8, 2024 9:30 am

By Shihar Aneez

Saturday June 8, 2024 9:30 am

ECONOMYNEXT – Two-time Prime Minister Narendra Modi’s less-than-expected win at the India’s parliamentary election may not change its foreign policy towards Sri Lanka, but aggressive push for connectivity and infrastructure projects in the island nation could be slowed, analysts say.

Modi’s Bharatiya Janata Party (BJP) lost its outright majority in the election and found itself reliant on support from regional parties.

Broader coalition National Democratic Alliance (NDA) led by Modi’s Bharatiya Janata Party (BJP) won 293 seats in the 543-member lower house of parliament, where 272 constitutes a simple majority.

However, Modi’s BJP won only 240, less than outright majority, making two regional parties’ leaders kingmakers in the alliance with their 28 seats in total.

India has been pushing for land, oil, gas, and power grid connectivity in Sri Lanka along with securing lucrative renewable energy and port projects in partnership with Indian private sector.

Here are some Q & A on the implications of Modi’s small margin victory based on analysts’ responses:

Q: What will be the key changes in Indian foreign policy towards Sri Lanka?

A: Despite a reduced margin, Modi’s administration is expected to continue its robust engagement with Sri Lanka, focusing on economic and development initiatives. India has been a key supporter during Sri Lanka’s economic crisis, providing significant financial and humanitarian aid. Most analysts say India will have the same policies on Sri Lanka. It will push for projects that have already discussed, will maintain a tough stance on Chinese influence and ships in Sri Lanka, and help the island nation in building capacity of the public sector.

Some analysts said the winning margin is only an academic interest and Modi’s government will consolidate the power once he takes oath on Sunday (09). However, they say, there could be a change the aggressiveness and intensity of Indian push on projects and other policies in Sri Lanka. The island nation is the only country which is now in good terms with India after Delhi’s diplomatic relations with Maldives took a hit following new President Mohamed Muizzu’s election with an “India Out” pledge, a move to oust Indian military from Maldivian soil. So, India may slow some of its hard push which has triggered anti-Indian sentiment in the recent past.

“India cannot afford to lose Sri Lanka after what happened in Maldives,” an analyst on diplomacy said.

“So it might soft peddle the policies and projects that are seen against Sri Lanka’s interests. Already we have seen a sudden rise in anti-Indian sentiment in the recent past with Indian firms trying to buy over Sri Lanka government institutions and other projects that are seen as exploitations.”

“India also may compromise on some of the deals in Sri Lanka which are seen as unfair by locals.”

Sri Lanka, however, is benefiting from increased Indian investment in various sectors, including energy and infrastructure. This ongoing support is crucial as Sri Lanka navigates its economic recovery and seeks to strengthen its regional ties, analysts say.

Q: Why has Sri Lanka become important for India?

A: Sri Lanka is located just below South India in the Indian Ocean. India in the past had been concerned over its security which could be affected by Sri Lanka’s foreign policy.

Analysts say these concerns pushed India to sign Indo-Lanka deal in 1987 which later saw the start of provincial and local government councils in the island nation along with close ties on matters related to the regional security.

India also has interests on Sri Lanka’s ethnic minority Tamils because of close cultural and religious ties to South India. After the end of a 26-year war in 2009, India has become more concerned over rising Chinese influence in Sri Lanka.

India has interests in strategic, economic, maritime security, cultural and historical ties, and diplomatic relations. These efforts are part of India’s broader policy to maintain regional stability and influence.

Q: What is India likely to do in Sri Lanka’s upcoming elections under the current Modi regime?

A: Analysts say Modi’s government, as in the past, wants to see a Sri Lankan government that would not go back close to China.

President Wickremesinghe congratulated Modi soon after his election victory and will take part in his oath taking on Sunday at 6 pm Indian Standard Time (IST).

“But it has been clear that President Ranil Wickremesinghe is not India’s first choice,” one analyst who has diplomatic experience told EconomyNext.

“India is always concerned over its security. So, it would like to see anybody who will protect its interests being elected.”

“India may not directly interfere or influence Sri Lanka’s election process for sure. But definitely it will have an indirect hand at some point.”

Indian High Commissioner Santhosh Jha has been actively meeting most Sri Lanka political leaders from both ruling and opposition parties almost on a weekly basis. Analysts see the move as a strategy to secure Indian interests regardless of the outcome of the upcoming elections.

Anura Kumara Dissanayake, leader of Sri Lanka’s populour Marxist Janatha Vimukthi Peramuna (JVP), was officially invited by India last year and his team was facilitated meetings with Indian Foreign Minister S. Jaishankar and National Security Advisor Ajit Doval. The move is seen as an Indian tactic to engage with the pressure group which has always been against Indian projects, citing “Indian expansionism in Sri Lanka”.

Q: What happened to Indian foreign policy under Modi’s previous two terms?

A: India has been pro-active in its foreign policy under Modi’s previous two terms. Analysts say India’s strong influence in Sri Lanka has made regime change in the 2015 presidential poll after the previous regime led by former leader Mahinda Rajapaksa followed a strong pro-Chinese foreign policy while allowing Beijing’s nuclear submarines to be docked in Colombo port without Delhi’s permission.

Apart from its strong and consistent foreign policies, Modi also has spread Hindutva or Hinduness, a political ideology encompassing the cultural justification of Hindu nationalism and the belief in establishing Hindu hegemony, in Sri Lanka’s North and East. Analysts also said the island nation has seen “unprecedented interference” by India under Modi while protesting against all Chinese activities including commercial projects and exchange programs with state-owned universities in the island nation’s North and East.

Last year, Modi’s administration was able to successfully ban Chinese research vessels coming to Sri Lankan waters for research purposes, Colombo government officials say. The move has hurt Sri Lanka’s diplomatic relations with China after Colombo allowed a German research ship before President Ranil Wickremesinghe government clarified the ban.

India also has been focusing on changing its negative perception that has led to strong anti-Indian sentiment in Modi’s second term. Despite many helps, many Sri Lankans still have strong anti-Indian sentiments due to the past experiences in Indian diplomatic relations including helping Tamil youths to fight against the state military, providing weapon trainings in the initial stage of the civil war, and atrocities by Indian Peace Keeping Force (IPKF) in late 1980s. Many Sri Lankans also see India exploiting island nation’s valuable resources including oil tanks in the Eastern port district of Trincomalee.

Q: What is India’s contribution in Sri Lanka’s economic recovery?

A: Massive. It was India which came to help Sri Lanka when the International Monetary Fund (IMF) delayed its loan program to Sri Lanka. India granted $1 billion credit line to buy essentials and also extended some repayments to ease the island nation’s unprecedented economic crisis which saw queues for fuel, cooking gas, and medicines along with long power cuts. (Colombo/June 08/2024)

Markets

Sri Lanka stocks close down 0.60-pct, dragged by HNB and LOLC

Friday November 13, 2026 3:28 pm

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed down on Friday, CSE data showed, with the benchmark All Share Price Index moving down 0.60 percent.

The ASPI was down 133.22 points at 22,024.18, while the more liquid S&P SL20 was down 1.06 percent, or 67.55 points, at 6,298.02.

The ASPI ended the week up 784.53 points from last Friday.

Positive contributors to the ASPI were Dialog Axiata (up 0.40 percent at 50.20 rupees), Distilleries Company of Sri Lanka (up 0.52 percent at 58.30 rupees), Aitken Spence (up 3.60 percent at 151.00 rupees), Ceylon Tobacco Company (up 1.05 percent at 1,828.50 rupees), and LOLC Finance (up 1.96 percent at 5.20 rupees).

Hatton National Bank (down 1.88 percent at 403.75 rupees), Richard Pieris and Company (down 6.21 percent at 27.20 rupees), LOLC Holdings (down 2.17 percent at 405.00 rupees), Sampath Bank (down 1.91 percent at 154.00 rupees), and Singer (Sri Lanka) (down 2.40 percent at 77.30 rupees) were top negative contributors.

Market turnover was 3.23 billion rupees. Capital goods led turnover with 869.21 million rupees. (Colombo/Nov13/2026)

Economy

Sri Lanka MP slams budget speech for omitting Tamil national question

Friday November 13, 2026 2:56 pm

ECONOMYNEXT – A Sri Lanka legislator has voiced strong disappointment that the President’s budget speech failed to make a single mention of the Tamil national question.

“It is very unfortunate that in His Excellency the President’s speech, there has not been a single word mentioned about the Tamil national question. Not a single word,” Shanakiyan Rasamanickam said.

“A budget speech generally, is a policy direction of the government for the next year. The budget speech is not only a statement of the country’s fiscal position or the economy’s position. It is the country’s, the government’s, plan, or what the government plans to do the following year. That’s a policy statement.”

Former presidents would at least mention the Tamil question even if it was not resolved, he said.

Former President Ranil Wickremesinghe in his speech, in his policy statement, he would mention: “The Tamil national question must be resolved,” Rasamanickam said.

Former Presidents Maithripala Sirisena and Gotabaya Rajapaksa also mentioned that the national ethnic question must be resolved, he added.

“Every President, every country’s Head of State, in their policy statements, have acknowledged the fact that there is an unresolved national issue, the Tamil national question, that it needs to be resolved. Various governments have proposed various mechanisms; none of them have succeeded, but at least it was mentioned.”

This year’s budget made allocations for the Office of Missing Persons, and the Office of Reparations.

“But the domestic mechanism is a mechanism that the victim community has rejected. So you all are allocating money to a mechanism where the victim community is not going to be part of.”

Last year’s budget 1 billion was allocated to be spent on the Trincomalee and Jaffna airports.

“Where was that 1 billion for the Trincomalee and Jaffna airports spent last year?”

“The trajectory of this government, Honourable Deputy Speaker, is worrying to me. It’s really worrying to me. Because if the objective is to say that there is no Tamil national question, if the objective is to say that you all have resolved any ethnic issue that this country faced, then Honourable Deputy Speaker, then I think the Tamil people will teach this government a very, very, very harsh lesson in the future.” (Colombo/Nov13/2026)

Bonds & Forex

Sri Lanka sells extra Rs6.5bn Treasury bills after auction

Friday November 13, 2026 12:32 pm

ECONOMYNEXT – Sri Lanka has sold 6,500 million rupees of treasury bills offered on tap at an average rate of 9.95 percent, the public debt management office said, bringing the total of bills sold in the week to 85.562 billion rupees.

The issue offered 90 billion.

Total market subscription was 6.5 billion rupees.

The debt office sold a 12-month bill at 9.95 percent.

On Wednesday (11) the debt office raised 79 billion rupees of 3, 6 and 12 month bills after offering 90 billion.

The settlement date is November 13. (Colombo/Nov13/2026)

Construction and Real Estate

Access Engineering Sept quarter group net profit surges 200-pct to Rs4.75bn

Friday November 13, 2026 12:15 pm

ECONOMYNEXT — Sri Lanka’s Access Engineering PLC recorded a group net profit attributable to equity holders of Rs. 4.75 billion for the quarter ended September 30, surging 200 percent from Rs. 1.58 billion a year earlier, interim accounts showed.

Basic earnings per share rose to Rs. 4.08 for the September quarter, up from Rs. 1.58 previously.

Quarterly group revenue expanded 36 percent to Rs. 20.39 billion from Rs. 14.94 billion, underpinned by condominium property handovers — reflected in inventories dropping Rs. 7.69 billion since March to Rs. 35.71 billion — alongside strong automobile sales and steady civil engineering execution.

Cost of sales rose at a slower 27 percent to Rs. 14.34 billion, lifting gross profit by 64 percent to Rs. 6.05 billion and expanding gross margins to 29.7 percent from 24.7 percent.

Other income jumped 144 percent to Rs. 259.9 million, while administrative expenses rose 75 percent to Rs. 1.14 billion, leaving operating profit up 64 percent at Rs. 5.16 billion.

However, finance costs more than doubled, rising 107 percent to Rs. 1.18 billion on elevated group borrowings of Rs. 43.74 billion, partly offset by finance income climbing 302 percent to Rs. 42.2 million.

Share of results from equity-accounted investees rose 122 percent to Rs. 26.7 million, pushing pre-tax profit up 56 percent to Rs. 4.05 billion.

Income tax swung to a net reversal of Rs. 186.6 million from an expense of Rs. 804.1 million, boosted by deferred tax assets on unrelieved losses from a 100 percent enhanced capital allowance claimed by 60 percent-owned radiopharmaceutical subsidiary Access Medical Tracers (Private) Limited.

Total period profit rose 136 percent to Rs. 4.24 billion, with non-controlling interest declining 24 percent to Rs. 164.9 million following last year’s buyout of minority shareholders in Harbour Village (Private) Limited.

No separate exchange gain or loss was itemized in quarterly earnings, though foreign currency translation via associates recorded a Rs. 17.4 million loss in other comprehensive income, alongside USD 16.6 million in corporate guarantees.

Notes also flagged an expected Rs. 1.45 billion recovery from the terminated South Asia Commercial and Logistics Hub project, a Rs. 225 million post-quarter legal settlement already provided for, and a Supreme Court appeal over a 2011/12 PAYE tax ruling.

Group assets stood at Rs. 132.4 billion as of September 30, with net asset value per share at Rs. 46.70, as the Employees’ Provident Fund raised its stake to 5.69 percent.

Access Engineering shares closed at 80.00 rupees at the end of September and are currently trading around 85.80 rupees. (Colombo/Nov13/2026)

Economy

Sri Lanka private sector says timely implementation of Budget 2027 key

Friday November 13, 2026 11:43 am

ECONOMYNEXT – Private sector body, The Ceylon Chamber of Commerce, said it was encouraged by the broad direction of Budget 2027, noting that it reinforces Sri Lanka’s commitment to economic transformation while maintaining policy continuity, macroeconomic stability, and fiscal discipline.

“This continuity is particularly important as the country seeks to transition from economic stabilisation to a more durable, investment-led growth trajectory.”

The chamber also noted several areas where the Budget could have placed greater emphasis to strengthen the country’s growth prospects.

“In particular, there is a need for a stronger focus on attracting Foreign Direct Investment (FDI), accelerating factor market reforms, particularly in land and labour, and fast-tracking public procurement reforms to improve the efficiency and speed of project implementation.

“More targeted and actionable proposals could have been introduced to unlock the potential of sectors with significant growth opportunities, including tourism, agriculture, IT/BPO and logistics.”

The chamber said the budget contains positive measures aimed at enhancing competitiveness, and external sector resilience, while presenting opportunities for focus on sectors that can accelerate growth.

“A number of the key structural reforms identified in last year’s Budget have been carried forward and strengthened, providing greater certainty and predictability to businesses and investors.

“These include the continued implementation of the Trade National Single Window (TNSW), the phased removal of para-tariffs, the rollout of the Digital ID framework, efforts to expand market access through new Free Trade Agreements (FTAs), the strengthening of one-stop-shop investment facilitation mechanisms, progress on Customs reforms, the expansion of Bandaranaike International Airport (BIA), enhanced financing support for SMEs, and reforms relating to the management of State-Owned Enterprises.”

The CCC said that more than 20 proposals submitted by it have been reflected in Budget 2027.

These include measures to strengthen investor facilitation through the establishment of a professionally managed investment promotion agency; continued efforts to improve trade facilitation and export competitiveness; the Government’s consideration of a successor programme with the International Monetary Fund (IMF); accelerated progress on key legislative reforms; the expansion of digital government services; and the promotion of cashless payments and broader digital adoption. The Budget has also captured several priorities relating to energy security, including the accelerated deployment of Battery Energy Storage Systems (BESS) and investments in fuel storage infrastructure, initiatives to optimize underutilized agricultural land, measures to support the expansion of the digital economy and the IT/BPO sector, and tax reforms to support exporters, including the acceptance of newly VAT-registered exporters as eligible exporters.

“The inclusion of these priorities reflects the value of sustained public-private dialogue and demonstrates increasing alignment between national policy objectives and the needs of a competitive, export-oriented economy.

“The priority now must be effective and timely implementation to translate policy commitments into investment, competitiveness, exports and sustainable growth.” (Colombo/Nov13/2026)