Sri Lanka and India will sign a pact to link power grids and start negotiations on an upgraded trade agreement within two months, Sri Lankan High Commissioner in India Milinda Moragoda has said.
India has provided some $4 billion in assistance to Sri Lanka since the crisis hit early last year, but the country is now seeking to enhance trade and investments as it moves to close a $2.9 billion loan from the International Monetary Fund, Mr. Moragoda told Reuters on Wednesday.
“We have to have growth, otherwise the economy will shrink. As far as growth is concerned, India offers that prospect. So we will have to move on from that. Tourism from India, investment from India, integration with India. That’s what we have to do,” Moragoda said.
A key part of Sri Lanka’s economic recovery plan rests on developing its renewable energy resources in the north, from where power can be transported into southern India through a cross-border transmission cable.
The two countries resumed talks on linking their electricity grids last year, and Moragoda said a memorandum of understanding on the project would be signed within two months, which will be followed by a feasibility study.
First proposed more than a decade ago, the project has made little progress so far. But Moragoda said Sri Lanka hoped to get the transmission line in place within two to three years so that renewable power produced can be sold to India.
“We need to have more sources of foreign exchange and electricity will be ideal,” he said. India is Sri Lanka’s biggest trading partner accounting for about $5 billion each in bilateral trade in 2021.
