Indian & Russian companies to manage China built airport in Sri Lanka

The government of Sri Lanka has decided to hand over the management of a Chinese-built Mattala Rajapaksa International Airport in Hambantota to an Indian and Russian company. This information was given by the Sri Lankan government on 26 April 2024 after a cabinet meeting.

Indian and Russian Company to manage Hambantota Airport

The Sri Lankan government will lease the management of the Mattala Rajapaksa International Airport or Hambantota Airport to Shaurya Aeronautics (Pvt) Ltd. of India and Airports of Regions Management Company of Russia. The companies will manage the airport for 30 years. The price of the contract has not been disclosed.

Mattala Rajapaksa International Airport (MRIA)

The Mattala Rajapaksa International Airport (MRIA) was built in Hambantota as the second international airport in Sri Lanka. Sri Lanka’s first international airport is the Bandaranaike International Airport in Colombo.

The  Mattala Rajapaksa International Airport was funded by the EXIM Bank of China. It provided $209 million for the project. The loan for the Mattala Rajapaksa International Airport was part of the $4.2 billion loan taken by the Sri Lankan government to fund various infrastructure projects in the country.

The loan to build the airport was taken during the former Sri Lankan president Mahinda Rajapaksa's rule. Mahinda Rajapaksa followed a pro-China policy and maintained a distance from India.

The airport built in Rajapaksa's hometown was inaugurated by the former president Rajapaksa in 2013. However the controversial airport never took off and it was plagued by persistent financial loss, low  number of flights. The airport was also opposed by the environment group due to its location in the environmentally sensitive location.

Economic Crisis in Sri Lanka 

The move by the Sri Lanka government to hand over the Hambantota airport is part of the government exercise to reduce its fiscal deficit.

In 2022 Sri Lanka faced a financial crisis when its foreign exchange reserves fell to a record low and finally it defaulted on its external debt. The government of India under its Neighbour First Policy provided economic aid to Sri Lanka to deal with its financial crisis.

Sri Lanka, being a member of the International Monetary Fund(IMF) took a $ 2.9 billion loan from the IMF to deal with its economic crisis. One of the conditions of the IMF loan was for the Sri Lankan government to reduce its fiscal deficit and reduce losses of its public sector companies.

The Sri Lankan government is also negotiating with the Chinese government to restructure its outstanding Chinese debt.

Sri Lanka has almost recovered from its economic crisis, and its economy is expected to grow in 2024 after a two-year gap.

ITC open its first Hotel in Sri Lanka 

As a mark of deep economic engagement between the two countries, the Indian company ITC Hotels has opened a 5-star hotel, ITC Ratnadipa, in Colombo. The hotel was inaugurated by Sri Lankan President Ranil Wickremesinghe on 25 April 2024. With an estimated investment of Rs 3000 crore, it is the biggest investment by an Indian company in the Sri Lankan hospitality sector.

The Sri Lankan economy is dependent on tourism, and it is one of the favourite international tourist destinations. Indians are the largest number of foreign tourists visiting Sri Lanka.

India Sri Lanka Trade and Economic ties 

India has traditionally been Sri Lanka's largest trade partner. 

Amongst the SAARC(South Asian Association of Regional Cooperation), Sri Lanka is the largest trading partner of India.

In 2021 the trade between the two countries was US$ 5.45 billion in 2021.

According to the Central Bank of Sri Lanka, India was one of the largest sources of foreign direct investment (FDI) to Sri Lanka. 

The total FDI from India so far exceeds US$ 2.2 billion. In 2021, India was the largest source of FDI which amounted to US$ 142 million. The main investments from India continued to be in the areas of petroleum retail, tourism & hotels, manufacturing, real estate, telecommunications, and banking & financial services.

India has been the largest source market of tourists visiting Sri Lanka.

President of Sri Lanka -Ranil Wickremesinghe,

Capital - Colombo is the executive and judicial capital of Sri Lanka. The legislative capital of the country is Sri Jayawardenepura Kotte.

Currency - Sri Lankan Rupee