How India fits into Sri Lanka’s post-crisis growth strategy

SRI Lanka begins 2026 in a narrow corridor between economic recovery and renewed climate risks.

- By. Soumya Bhowmick

Prime Minister Dr. Harini Amarasuriya with Indian Prime Minister Narendra Modi during her visit to New Delhi in October last year

The economy has moved past the 2022 balance-of-payments collapse, but resilience is being tested again as the country rebuilds after Cyclone Ditwah. The World Bank’s damage estimate of about US$4.1 billion is a reminder that climate shocks now arrive as macro shocks, tightening fiscal space just as confidence starts to return.

Colombo is leaning on the quickest earners of foreign exchange, especially tourism, while trying to keep the reform agenda credible —the island nation has presented 2026 as a year to expand tourism activity as part of the recovery effort. Yet the next phase cannot be built on inflows alone. It requires rewiring the economy toward productivity, export diversification, and stronger regional linkages that reduce vulnerability when demand, financing conditions, or weather turn.

In this setting, the partnership between New Delhi and Colombo matters less as emergency support and more as a route to durable competitiveness. Prime Minister Harini Amarasuriya’s official visit to India in October 2025 put education and skills, technology cooperation, trade, and connectivity at the centre of the bilateral agenda, alongside efforts to keep political frictions from spilling into the economic sphere. The test now is implementation, moving from communiques to working corridors, interoperable systems, and investment pipelines that survive political cycles on both sides.