In a major disturbing development, Rajapaksa led government in Sri Lanka has cancelled an agreement signed by the previous regime in 2019 for India and Japan to develop the strategic East Container Terminal (ECT) at Colombo port with Adani Group as an investor. This happened in light of Sri Lanka’s regime facing the threat of nationwide agitations against port privatisation.

The decision to develop the ECT was flagged off last month by Sri Lankan Prime Minister Mahinda Rajapaksa in the Parliament where he further maintained that government has not decided to hand over the management of the East Container Terminal, in whole or in part, to any foreign company. External Affairs Minister S Jaishankar had paid an official visit to Sri Lanka from 5-7 January 2021. Amid rising sour ties with China and Pakistan, Jaishankar’s visit was seen as a crucial one and might boost up India-Sri Lanka’s economic and diplomatic ties in the coming months.

This visit signified the priorities both countries attach to strengthening their close and cordial relations in all spheres of mutual interest. Multiple sources said President Gotabaya Rajapaksa stood by the agreement to develop the strategic East Container Terminal. Strong opposition from trade unions at the Colombo port had rocked the Lankan country since the announcement of working with Adani Group as an investor.

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The ECT project was considered strategically important for India, mainly for security reasons amid Chinese aggression as the China Merchants Port Holdings Company holds 85 per cent stake in the Colombo International Container Terminal which is situated near the ECT.