This article covers economic relations between India and Sri Lanka: the value of merchandise trade, negotiations on a trade agreement, Indian investment in Sri Lanka, the economic agreements and documents the two governments have concluded, and India's financial support during Sri Lanka's 2022 economic crisis. The facts come from the Ministry of External Affairs (MEA) brief of June 2026 and describe the position at that date.
Merchandise trade
According to the MEA brief of June 2026, India has traditionally been among Sri Lanka's largest trade partners. Merchandise trade between the two countries amounted to USD 7.18 billion in FY 2025-26, with India's exports at USD 5.52 billion and Sri Lanka's exports at USD 1.66 billion.
The brief does not break this trade down by product.
Economic and Technology Cooperation Agreement
The two countries are negotiating an Economic and Technology Cooperation Agreement (ETCA) covering both goods and services. Negotiations resumed in October 2023 after 5 years, and the latest (14th) round of talks was held in July 2024.
Indian investment in Sri Lanka
The brief describes India as one of the largest contributors to Foreign Direct Investment (FDI) in Sri Lanka. It gives cumulative Indian investment of USD 2.94 billion till 2025, citing the Central Bank of Sri Lanka, and USD 213.67 million in 2025, citing the Board of Investment, Sri Lanka.
The main Indian investments are in energy, hospitality, real estate, manufacturing, telecommunication, and banking and financial services.
Economic agreements and documents
Several economic documents have been concluded during leaders' visits:
- During President Ranil Wickremesinghe's visit to India in July 2023, the two sides adopted a vision document titled "Promoting Connectivity, Catalysing Prosperity: India-Sri Lanka Economic Partnership vision", centred on enhanced connectivity and deeper economic partnership.
- During President Anura Kumara Disanayaka's State visit in December 2024, the two sides exchanged a Protocol amending the Agreement for the avoidance of Double Taxation. The President also addressed a business interaction in New Delhi.
- The Bilateral Amendatory Agreements on Debt Restructuring were concluded during PM Modi's visit to Sri Lanka in April 2025.
Financial support during the 2022 economic crisis
The brief states that, besides developmental assistance, India provided assistance close to USD 4.1 billion to Sri Lanka during the economic crisis in 2022. The elements it lists are:
- a Line of Credit (LoC) for the supply of petroleum products
- a currency swap of USD 400 million extended to the Central Bank of Sri Lanka (CBSL) by the Reserve Bank of India (RBI)
- a USD 1 billion credit facility for the supply of food items, medicines, fuel and industrial raw materials
- deferment of payment of liabilities of approx USD 2 billion under the Asian Clearing Union (ACU) mechanism by CBSL to RBI in 2022
- a USD 55 million LoC for procurement of Urea Fertilizer
The deferred ACU liabilities were later restructured into a single liability of USD 2.6 billion under a Special Swap Agreement, including about USD 200 million in interest payments.
Ministerial visits for business events
Sri Lankan ministers have visited India for trade and industry events. The brief lists:
- Minister of Industries & Entrepreneurship Development Sunil Handunnetti, for Bharat Tex in February 2025
- then Minister for Urban Development, Construction and Housing Mr. Aruna Karunathilake, for the Kerala Urban Conclave 2025 from 12-13 September 2025
- Minister of Energy Mr. Kumara Jayakody, for the 6th International Energy Conference & Exhibition (IECE 2025) from 23-24 September 2025
- Minister of Trade, Commerce, Food Security and Cooperative Development Mr. Wasantha Samarasinghe, for World Food India 2025 from 24-26 September 2025
- Minister of Ports & Civil Aviation Mr. Anura Karunathilake, for India Maritime Week from 27-28 October 2025