By Dr. Mohamed Shareef Asees
About the Author
Dr. Mohamed Shareef Asees is a Berlin-based Researcher in Peace and Conflict Studies with over fifteen years of teaching and research experience across Sri Lanka, Japan, Qatar, China, and Germany. He has taught at the University of Colombo, Qatar University, the Bandaranaike Center for International Studies (BCIS), Freie Universität Berlin, and Alice Salomon Hochschule. His work focuses on regional security, maritime geopolitics, and peace building in the Indian Ocean.
Introduction
The Indian Ocean is more than just a body of water — it’s a vital part of the world’s economy and a key area of global competition. Spanning over 70 million square kilometers, it connects the oil-rich Middle East, the manufacturing hubs of East Asia, and the growing markets of Africa and South Asia. In fact, over 80% of the world’s maritime oil trade passes through these waters, making the Indian Ocean essential for global trade. Right in the middle of this busy and important region lies Sri Lanka. Although small in size, the island holds great strategic value. Its location has made it a center of international interest, regional rivalry, and economic opportunity. At the same time, Sri Lanka faces the challenge of managing these pressures while staying true to its own path.
Sri Lanka’s Strategic Position in the Indian Ocean
Located just north of the equator and close to major international shipping routes, Sri Lanka holds a key maritime position in the Indian Ocean Region (IOR). These sea lanes carry around 60% of the world’s seaborne trade, including vital energy supplies that keep economies running across continents. One clear example of Sri Lanka’s growing importance is the Port of Colombo, one of the busiest ports in South Asia. In 2024, it saw an impressive 12.1% growth in container handling, managing 7.78 million TEUs (twenty-foot equivalent units). Notably, 81% of this traffic was transshipment cargo—goods that are transferred from one ship to another—highlighting Sri Lanka’s emerging role as a key logistics hub in the region. With new terminals like the East Container Terminal and Colombo West International Terminal being added, total capacity is expected to cross nine million TEUs this year. On the southern coast, the Hambantota Port, built with Chinese support under the Belt and Road Initiative (BRI), adds another strategic layer. While the port holds significant economic potential, it has also raised concerns. In 2017, after struggling to repay its loans, Sri Lanka handed over the port on a 99-year lease to China Merchants Port Holdings—a move that has sparked debate about debt diplomacy and national sovereignty.
India and China: A Tug of War in the Indian Ocean
Sri Lanka finds itself at the heart of a strategic contest between India and China. China has invested over $12 billion in Sri Lankan infrastructure projects, deepening its influence through initiatives like the Hambantota Port and the Colombo Port City project. These moves reflect China’s longterm ambitions in the Indian Ocean. India, viewing the ocean as its strategic backyard, has responded by intensifying its economic and diplomatic ties with Sri Lanka. In 2022, India extended $4 billion in assistance to help Sri Lanka navigate its financial crisis. Recent agreements cover energy cooperation in Trincomalee, joint renewable energy projects, and establishing a Maritime Rescue Coordination Centre (MRCC) in Colombo. This strategic tug-of-war places Sri Lanka in a delicate position—balancing the competing interests of two regional giants while maintaining its sovereignty and economic stability.
Extra-Regional Powers and the Geopolitical Chessboard
Beyond the regional powers, extra-regional players like the United States, Japan, Australia, and the European Union have also set their sights on Sri Lanka’s strategic location. Their interest is to maintain a free, open, and rules-based Indo-Pacific region. The United States has strengthened naval cooperation with India and encouraged Sri Lanka to be a stabilizing force in the region. Japan has invested in port development and maritime infrastructure, while Australia and the EU support maritime security efforts against piracy, trafficking, and illegal fishing. The Quad alliance comprising the US, India, Japan, and Australia views Sri Lanka as key to ensuring maritime domain awareness and safeguarding crucial sea lanes. As global supply chains face disruptions from crises such as those in the Red Sea, Sri Lanka’s role as a maritime hub becomes more vital.
Maritime Security and Regional Stability
With persistent threats like piracy, human trafficking, and maritime terrorism, Sri Lanka has prioritized enhancing its maritime security. Joint exercises with the Indian Navy (SLINEX), the United States (CARAT), and other partners strengthen surveillance and defense capabilities. The 2024 SLINEX exercise included amphibious operations, anti-submarine warfare drills, and air support coordination. These partnerships not only enhance Sri Lanka’s naval readiness but also reaffirm its commitment to regional security. Modernizing the naval fleet and expanding maritime domain awareness remain key priorities. The Indian-funded Maritime Rescue Coordination Centre (MRCC) in Colombo, with $6 million in funding, aims to coordinate search and rescue operations and improve overall maritime surveillance.
Economic Growth and Infrastructure Development
Sri Lanka’s geographic advantage is not just strategic but also economic. Expanding the Port of Colombo and integrating inland logistics can transform the country into a South Asian logistics powerhouse. Special Economic Zones (SEZs) near ports, improved digital infrastructure, and streamlined customs procedures can further boost trade efficiency. The Port of Colombo handles nearly 40% of Indian transshipment cargo, highlighting close economic ties with India. Growing foreign investments, such as the Adani Group’s stake in the West Container Terminal, demonstrate increasing global confidence in Sri Lanka’s maritime potential. Additionally, the tourism sector stands to benefit from improved connectivity, with opportunities for cruise tourism and coastal infrastructure development on the horizon.
Embracing the Blue Economy and Environmental Sustainability
As the world turns towards sustainability, Sri Lanka can lead in developing the blue economy. From fisheries to offshore wind energy, the island’s marine resources offer sustainable growth opportunities. Sri Lanka’s National Policy on Ocean Affairs emphasizes protecting marine biodiversity and managing ocean resources responsibly. Investments in offshore wind farms near Mannar and the natural deep-water harbor of Trincomalee could position Sri Lanka as a clean energy hub for South Asia. Regional collaboration on marine conservation, climate change mitigation, and disaster risk reduction will be crucial to ensuring a sustainable maritime future.
Diplomacy and Non-Alignment: Sri Lanka’s Guiding Principles
Sri Lanka’s longstanding policy of non-alignment—maintaining friendships without enmity— remains a prudent approach amid rising great power competition. By engaging all parties strategically and avoiding entanglement in broader conflicts, Sri Lanka can safeguard its sovereignty and promote regional peace. Participation in multilateral forums like the Indian Ocean Rim Association (IORA), BIMSTEC, and the ASEAN Regional Forum allows Sri Lanka to take a proactive role in regional governance, championing maritime safety, trade facilitation, and disaster resilience.
Conclusion: Charting Sri Lanka’s Maritime Future
Sri Lanka stands at a transformative crossroads in the Indian Ocean. With its rich maritime history, growing port infrastructure, and strategic location, the island nation holds the potential to become a key player in fostering economic connectivity and regional peace.
To seize this opportunity, Sri Lanka must:
- Strengthen maritime infrastructure with a focus on sustainability and resilience.
- Enhance naval capabilities and deepen regional security cooperation.
- Maintain a careful diplomatic balance between competing powers.
- Invest in human capital and digital connectivity to support logistics growth.
- Lead regional efforts in the blue economy and ocean sustainability.
The seas around Sri Lanka are not just waters of commerce — they are corridors of opportunity. Embracing its maritime identity and fostering regional cooperation will allow Sri Lanka to turn its geographic destiny into a beacon of stability, prosperity, and peace in the Indian Ocean.
References
Daily Mirror. (2024). Colombo Port sets new transshipment mark with 6.31mn TEUs. https://www.dailymirror.lk
Lanka Business Online. (2024). SLPA achieves record-breaking container throughput.
The Peninsula Foundation. (2022). China’s role in infrastructure development in post-civil war Sri Lanka. https://www.thepeninsula.org.in
AP News. (2023). India and Sri Lanka sign defense and energy deals. https://apnews.com
The Diplomat. (2024). Sri Lanka’s defense cooperation with India. https://thediplomat.com
Maritime Gateway. (2024). Colombo Port expansion plans. https://www.maritimegateway.com
Indian Ocean Rim Association (IORA). (2024). Blue Economy Initiatives. https://www.iora.int
