In a significant development aimed at bolstering financial ties between India and Sri Lanka, the Sri Lankan government has officially designated the Indian Rupee (INR) as a foreign currency in their economic system. This move is expected to not only facilitate trade settlement between the two countries in INR but also enable Indian tourists visiting Sri Lanka to conduct transactions in their national currency.
The announcement was made by Bagchi during a weekly media interaction in New Delhi, just hours before Sri Lankan President Ranil Wickremesinghe’s arrival in the capital city. This visit marks the first time a Sri Lankan leader has traveled to India since the nation faced an unprecedented economic crisis last year. President Wickremesinghe’s visit, following an invitation from Indian Prime Minister Narendra Modi, is of significant importance to both countries as they seek to strengthen their long-standing friendship and explore avenues for enhanced connectivity and cooperation across various sectors.
Sri Lanka and India have shared a deep-rooted relationship, and the Indian government has been a steadfast partner in assisting Sri Lanka during challenging times with Indian Rupee. When Sri Lanka plunged into economic turmoil, India extended a helping hand by providing vital aid, medicines, and other essential items with Indian Rupee. Last year, India’s support amounted to nearly $4 billion, including currency assistance, deferred loan payments, and lines of credit for emergency purchases of food, fuel, and medicines.
The designation of the Indian Rupee as a foreign currency is expected to open up new possibilities for economic growth and cooperation between the two nations. The utilization of this financial arrangement will largely depend on India’s private sector and those actively engaged in the trade industry. This move paves the way for enhanced financial and economic connections with Indian Rupee, fostering a conducive environment for bilateral trade and investment.
During President Wickremesinghe’s visit, discussions will revolve around various issues of mutual interest, and he is scheduled to meet with his Indian counterpart, Droupadi Murmu, as well as Prime Minister Narendra Modi and other Indian dignitaries. The Ministry of External Affairs highlighted that Sri Lanka holds a significant position in India’s Neighbourhood First Policy and Vision SAGAR (Security and Growth for All in the Region). The visit is expected to reinforce the longstanding friendship between the two countries and explore opportunities for further cooperation, particularly in grid connectivity, port development, and renewable energy projects, predominantly in the northern region of Sri Lanka.