India to provide $318 million line of credit to Sri Lanka for development of its railway sector

India on 6 June 2017 signed an agreement to provide fresh assistance of USD 318 million line of credit to Sri Lanka for the development of the railway sector in the country. The agreement was signed in Colombo, the capital city of the island nation.

Signatories of the agreements included RHS Samaratunga, Secretary, Ministry of Finance and Mass Media, and David Rasquinha, Managing Director of India’s Export-Import Bank (EXIM Bank). The Sri Lanka Railways will implement the projects under the supervision of Ministry of Transport and Civil Aviation.

India has already provided four Lines of Credit for the development of railway sector in Sri Lanka through its EXIM Bank amounting to approximately USD 966 million.

India, Sri Lanka exchanged four agreements to ensure peace and stability in the region

These credit facilities have been utilised to improve the Southern and Northern railway lines and for the procurement of rolling stocks for the Sri Lanka Railways.

Background

Prime Minister Narendra Modi during his first visit to Sri Lanka in 2015 had declared a line of credit USD 318 million for the development of Sri Lanka’s railway sector. His visit was the first visit of Indian Prime Minister to Sri Lanka since 1987 and critics say that the visit was necessitated the backdrop of increasing Chinese presence in the Indian Ocean nation.

India has been Sri Lanka’s major development partner in the South Asian region for more than 40 years. Over the past years, Indian foreign direct investment in Sri Lanka has expanded considerably.

IRCON and Sri Lanka Railways Signed an Agreement on Infrastructure Development

At present, the Indian development assistance to Sri Lanka has mainly focused on improvement of infrastructure, education, healthcare, livelihood development and capacity building.