India, Sri Lanka looking at trading in national currencies: Sri Lankan Minister Balasuriya

Sri Lanka’s State Minister of Foreign Affairs Tharaka Balasuriya has said that India and Sri Lanka are working to trade in national currencies, a development that comes even as both sides have been focusing on financial connectivity.

Speaking to our diplomatic correspondent Sidhant Sibal, he said, ” it makes more sense to pay for those goods in the local currency. So I think it’s a very good proposal, and it will also be very easy for the Indian tourists to come and they come to Sri Lanka and pay in Indian Rupees”.

The minister was in Delhi for the BIMSTEC grouping’s foreign minister retreat. He termed the India-Sri Lanka ties being at “all-time high”, and pointed to India’s economic support during the financial crisis his country faced.

He explained, “India’s role in helping Sri Lanka was fundamental in Sri Lanka making a quick recovery..”. On BIMSTEC, he backed increased connectivity and focus on FTA within the 7 member grouping. He also spoke on the expansion of the sea bed issue, the Katchatheevu island issue etc. Full interview:

WION: How do you see India, and Sri Lanka ties?

Tharaka Balasuriya: It’s always good to be back in Delhi. The last time I was here was for the Raisina dialogue. The relationship between Sri Lanka and India is at an all-time high. And we have our bilateral ties are very good. We are collaborating in different spheres. And I think what we need to do, is to make sure that some of the things which we have discussed will materialize in the future very soon. So, I will say that the relationship between Sri Lanka and India is at an all-time high.

WION: If you can talk about the current economic situation and the Indian support for your country.

Tharaka Balasuriya: “I wouldn’t say we’re out of the woods, we still have a long way to go. Our debt restructuring has pretty much finished bilateral and also we have made the agreements with the bondholders, but we need in terms of generating new revenue streams, we need to be looking at new avenues to generate new revenue streams, and India’s role in helping Sri Lanka was fundamental in Sri Lanka making a quick recovery whereas the multinational institutions should have stepped in, in such a scenario, it took a little bit of time for the multilateral institutions to step in.”

“So it was India who stepped in with the $4.5 billion loan. At that time, we had queues which were two or three miles long, we did not have cash, and we were short of medicine. It was very gloomy in Sri Lanka, but now I think you know, if you have visited Sri Lanka, you will see that most things are back to normal. And tourism is thriving. Tourists are back in numbers,” he said.

“The economy’s doing quite well. In this year,  the growth rate was 5.3% in the first quarter. So I think we are on the right track. And of course, in order to achieve that we also had to take very difficult measures, such as raising the taxes, such as not extending the public service and also such as making sure that reducing subsidies and making sure that the pricing was cost-based. So we had to go through a tough period but I am optimistic to say that most of it is now behind us,” Balasuriya said.

“And from my overseas travels, maybe one year back when you meet foreign dignitaries, the first thing they ask is how’s the situation in Sri Lanka, is there food to eat? Most foreign dignitaries would ask those questions, but I think that you know now when you visit other countries, most of the foreign dignitaries are asking how are you able to make such a quick recovery. And also the interest in Sri Lanka from all over is growing due to its location. So I’m very optimistic for the medium term and the long term prospects of Sri Lanka,” Balasuriya added.

WION: India has also stepped up its support to Sri Lanka in terms of infrastructure development, whether it’s the oil fields we have been talking about or whether it is providing training to your civil servants.

Tharaka Balasuriya:  So yes, indeed. I think one of the new revenue streams which we are looking at is pertaining to energy. Both my President and Prime Minister Modi are interested in making Trincomalee an energy hub. We are also looking at grid connectivity with India. So we are looking at connectivity with India in different spheres, people-to-people connectivity is very important. They are looking at the sea connectivity, maybe restarting the ferry service, maybe on a roll on- roll off basis, ferries, then we are looking at the air connectivity. Now there are flights flying to Chennai, flying to Jaffna but we are also in discussions with India to increase the length of the tarmac, So, large planes can come to Jaffna. Then we are looking at grid connectivity. So, we are looking at connectivity with India in a large way. 

WION: Are you also looking with India Sri Lanka and a third country for example, India, Japan and Sri Lanka when it comes to ports are India, Russia and Sri Lanka when it comes to the airports

Tharaka Balasuriya: Will you know depends on the industry I think, now if you look at the Mattala International Airport, it’s India, Sri Lanka and Russia and from the perspective of Sri Lankans, the highest number of tourists come to Sri Lanka from India. The second place number is from Russia. So it makes all the sense to have a tri-party agreement and to make sure that more tourists visit Sri Lanka. So I think you know, we should not just be looking at India, but also through India, we should be looking at it as a gateway to the rest of South Asia and also to Southeast Asia.

WION:  So, you mentioned connectivity. Now, one connectivity which has been discussed is the land connectivity between India and Sri Lanka. This was one of the key outcomes of the earlier visit of the Sri Lankan President. How’s it going about and what’s the view in Sri Lanka regarding it

Tharaka Balasuriya: It’s proceeding well at the highest level. I think the terms of reference have been done and then also an RFP has been given to Sri Lanka. Now we need to select a consultant in that regard. The bridge itself will, I think, take about four years to build. So that will be a game changer. The BIMSTEC foreign ministers had a time with Prime Minister Modi ji, and one thing I again emphasized was the bridge. And one point that the Prime Minister made was that if you look at the EU, and if you look at South Asia or Southeast Asia, for that matter, what he pointed out was that the reason that the EU succeeded is simply because of connectivity. So you know, India and Sri Lanka or be it you know, the road network between India and Myanmar and Thailand, we need to improve connectivity in all its forms. So there’ll be more business transactions taking place if there’s better connectivity.

WION: So you mentioned bridges in four or five years any year you’re looking at.

Tharaka Balasuriya: I hope construction on the bridge will start as soon as possible. I mean, just think in terms of tourist numbers. I believe that you know if you look at the internal tourists, local tourists, Tamil Nadu gets the most number of tourists, they get about 140 million tourists . Rameshwaram alone gets 10 million tourists. So whether Sri Lanka stands this. Sri Lanka at the moment, has about 1.1 million tourists this year. And we are looking to get 2.4 million tourists at the end of the year. I think you know if we have a bridge that 2.4 million or 5 million tourists coming from India can take place within months. We’ve been building walls for too long. So we need to build the bridges now. 

WION: Sri Lanka plans to expand its seabed. India also plans to expand its seabed, it has put up a proposal as well. What’s the update? Like? Is this an issue that is a thorny one between India and Sri Lanka.

Tharaka Balasuriya:  No, certainly, not. I think we know each country has a right to claim beyond 200 nautical miles. So if there are areas of contention, those areas can be discussed and resolved bilaterally and we plan on having discussions with India and resolving this matter amicably.

WION: Have you raised it with the Indian side so far?

Tharaka Balasuriya: No, this was the BIMSTEC meeting. So it wasn’t a bilateral meeting. I did have a meeting with Dr. Ashok. But we didn’t discuss this issue. There were other bilateral matters which we discussed in

WION: In the past, has this been discussed because it looks like an old proposal?

Tharaka Balasuriya: I don’t think that it is a major issue, pertaining to this. We had a similar issue with the Maldivians and then we decided we would discuss it with the Maldivian government bilaterally and can be sorted out amicably. So I don’t think these are areas of contention. 

WION: Coming back to connectivity, I believe there’s so much to talk about connectivity. Financial connectivity, we saw the UPI being agreed on between India and Sri Lanka that will help a lot of Indian tourists go into your country. What are the other proposals? We are looking at the usage of the Indian rupee. Is this also on the anvil?

Tharaka Balasuriya: Yes, I think, from the Sri Lanka side we become less dollar-dependent. If more Indian tourists come to Sri Lanka, you can pay for the Indian goods in Indian rupees, then you only save a lot of money in terms of commissions and converting all money to dollars and paying your receipts in dollars. So it makes more sense to pay for those goods locally in the local currency. So I think it’s a very good proposal, and it will also be very easy for the Indian tourists to come and they come to Sri Lanka and pay in Indian Rupees.

WION: So is there work happening on trading in the national currencies between India and Sri Lanka? 

Tharaka Balasuriya: Yes, the work is proceeding well and I think by next year we will have identified a certain number of locations where these machines/ATMs can be used in order to trade.

WION: There is another issue that maybe Sri Lanka and India might not see eye to eye. One is the visit of the Chinese research vessels. How have you assured New Delhi?

Tharaka Balasuriya: There’s a moratorium which is in place and will be until the end of the year, and at the end of the year, we will renew our position. But we are also very interested in developing our own capacity. So I think once we develop our own capacity as a sovereign country, then we can do the research ourselves. So this in terms of Sri Lanka’s issues is not a major priority. Of course time and again we have stated that we are very interested in India’s security interest. We want to make sure that no country uses Sri Lanka in order to threaten India’s security and we have given that assurance and we will work towards that. But we will also want to trade with other countries.  Certainly, India does far more trade with China than you know Sri Lanka does with China. I think India’s trade with China is about $140 billion, whereas Sri Lanka’s trade with China is a fraction of that. So, perhaps, maybe even Sri Lanka can be an opportunity for these two countries to, to trade.

WION: Any conversation on Katchatheevu island?

Tharaka Balasuriya: That’s an internal matter and it has not been raised by the Indian partners and it has been addressed in the 1970s. So I don’t think that’s a matter which we need to raise up. I think certain Indian politicians raised that matter from a historical perspective, to show that , from India’s perspective, perhaps it was a mistake. But Indians have not raised the matter of Katchatheevu to Sri Lanka and on three or four occasions when the matter has been raised by the Indians, once when Sri Lanka was still a dominion of the United Kingdom, the Royal Air Force used for bombing purposes, India raised concerns. Then regarding the fishing rights, and then later on there were discussions on the islands being used by the smugglers. But I think historically, the sovereignty of the island has not been questioned. And I think it’s a matter which is done and dusted.

WION: Last few questions this time on the multilateral aspect. You’re here for the BIMSTEC foreign ministers meeting. Where do you see this grouping going forward?

Tharaka Balasuriya: I feel that you know, there’s more political will. And I feel that you know, there’s 2 billion people who have been represented in the BIMSTEC. And certainly, we need to have closer integration within the BIMSTEC. We have been talking about an FTA within the BIMSTEC. And certainly, certainly, I think An FTA should come into place hopefully, and there’s more political will. Now just imagine BIMSTEC alone represents 2 billion people and in Thailand and Myanmar, are also represented in ASEAN. And then ASEAN represents a further 2 billion people. So you’re talking about 4 billion people. So I would think that within the next few years, there will be a closer dialogue with the BIMSTEC members and it’s only seven members so we can have close dialogue. One proposal which was agreed upon was at the United Nations, in September every year for the BIMSTEC foreign ministers also to meet and have discussions. So this was a foreign minister’s retreat. These discussions were very open and frank. It was very informal and our ideas and suggestions were taken into consideration. So we will be looking at the verticals in terms of energy security, in terms of food security, and in terms of people’s security. And in all these, the other subclasses can be put into the three areas.

WION: What are your hopes for the upcoming summit in Thailand?

Tharaka Balasuriya:  We want the summit to be successful and we want the things to materialize in terms of BIMSTEC itself, it is 27 years old. So the charter was passed during our presidency. But we want something concrete to come out of the group. Now, if you say that you are a member of the EU, then you feel like you’re a member of the EU, you know you can travel freely within each country. So I think you know in order for the BIMSTEC to be successful, people in these countries, ordinary people in these countries need to feel that there’s an organization called BIMSTEC, and because of this organization, there are certain benefits that the people are gaining. We are also hopeful that you know, that FTA will come through in the BIMSTEC, and there are other areas such as medical visas, and e-Visas to India are allowed. So, there was an array of areas which we discussed.