COLOMBO, Sri Lanka (AP) — On April 5, 2025, Indian Prime Minister Narendra Modi embarked on an official visit to Sri Lanka where he inaugurated the construction of a solar power plant. Modi's visit coincided with the signing of significant energy and defense agreements, which are viewed as strategic moves to enhance New Delhi's influence in the economically distressed island nation.

The geopolitical landscape in the region has become increasingly competitive, with India expressing concerns about China's growing presence in Sri Lanka. Strategically located along one of the busiest shipping routes in the world, Sri Lanka is considered by India to be within its sphere of influence. China's financial involvement has seen the provision of billions of dollars in loans for various development projects in Sri Lanka.

Sri Lanka's economic crisis in 2022 prompted a shift in the nation’s priorities, creating an opportunity for India to strengthen its ties with Sri Lanka. While India provided substantial financial and material assistance to the island nation, China's backing remains essential to restructure its infrastructure loans, which is critical for Sri Lanka's recovery.

During his visit, Modi held discussions with Sri Lankan President Anura Kumara Dissanayake, resulting in the virtual inauguration of an Indian-funded 120 megawatt solar power plant. This project is a joint venture between India and Sri Lanka and aligns with the country’s ambitious objectives of reducing its reliance on fossil fuels.

In the wake of a severe electricity shortage in 2022, Sri Lanka's need for renewable energy sources has become more pressing. Additionally, China has plans for a $3.7 billion oil refinery near Hambantota port, a location that has gained strategic significance after Sri Lanka's inability to repay the loan for its development led to Beijing gaining control over the port. This development allows China to establish a strong foothold directly opposite India’s coastline.

To address the economic difficulties faced by Sri Lanka, both India and China have reached agreements with the country regarding the restructuring of its debt. These financial arrangements aim to facilitate Sri Lanka's emergence from its recent bankruptcy and to assist in rebuilding its fragile economy.

Modi’s visit and the agreements signed during it underline the complex dynamics of South Asian geopolitics, characterized by India and China vying for influence in Sri Lanka. As new partnerships are forged amidst the backdrop of economic recovery, the future of Sri Lanka remains pivotal for both regional powers seeking to bolster their strategic interests in this key maritime location.