Sri Lanka presidential elections: What's at stake for India and China

As Sri Lanka prepares to hold its first national election since the country’s 2022 financial default, the island nation finds itself at the heart of a geopolitical tug-of-war between India-US on the one side and China on the other. The polls, set for this weekend, come after Sri Lanka’s worst economic crisis in 70 years of independence, which saw inflation skyrocket, family savings evaporate, and a president ousted by mass protests.

Driving the news

• Sri Lanka will hold its presidential election on September 21, 2024, marking a critical turning point for the country.
• This will be the first election since the unprecedented economic meltdown of 2022, which led to mass protests, political upheaval, and the ousting of then-President Gotabaya Rajapaksa.
• The election has drawn significant attention, with over 30 candidates running, including President Ranil Wickremesinghe , opposition leader Sajith Premadasa , and the leftist Anura Kumara Dissanayake .
• As 17 million Sri Lankans head to the polls, the future trajectory of the island nation hangs in the balance.

Zoom in

• This election is seen as a referendum on the government’s handling of the country’s worst economic crisis in decades. Wickremesinghe, who took over after Rajapaksa’s resignation, has stabilized the economy to some extent by securing an International Monetary Fund (IMF) bailout and implementing reforms.
• However, these reforms—including steep tax hikes and the removal of subsidies—have been painful for many Sri Lankans. With inflation down from a high of 70% to below 5%, Wickremesinghe is running on his record of economic recovery.
• But the question remains whether this recovery has been broad and deep enough to resonate with voters still struggling to make ends meet.

Why Sri Lanka matters

• Sri Lanka’s strategic position makes it a critical player in maritime trade and regional security. With ports such as Colombo and Hambantota acting as key nodes in the global shipping network, controlling Sri Lanka’s major infrastructure projects has significant implications for India and China’s broader ambitions.
• As regional trade has expanded, Sri Lanka’s ports have become increasingly crucial for transshipping goods across Asia. The Colombo West International Terminal is expected to significantly boost capacity, making Sri Lanka an even more critical hub for global maritime trade. This, in turn, makes the island nation a key piece in the ongoing geopolitical chess game between India and China.
• “This is a country that has been struggling economically, struggling with a lot of bad debt, and that has not yielded the economic returns for the country as it should have,” Nisha Biswal, deputy chief executive of the US Development Finance Corp, told Bloomberg during an interview. “Sri Lanka is at the crossroads of all seafaring commerce that transverses the Indo-Pacific.”

India's stake in the election
India has grown increasingly wary of China’s influence in Sri Lanka, especially after Colombo leased Hambantota Port to a Chinese firm. Hambantota, once envisioned as a major shipping hub, failed to attract container traffic, leading to financial losses that forced Sri Lanka to hand over control to China for 99 years in exchange for $1.1 billion. This episode has fueled Indian concerns that the port could one day become a Chinese military base, a prospect Sri Lankan officials have denied.

However, India has been actively working to strengthen its ties with Sri Lanka. Nowhere is this more evident than in Colombo, the capital, where India’s Adani Group, backed by US funding, is spearheading a multi-million-dollar expansion of the Colombo West International Terminal. This project aims to increase Sri Lanka's capacity as a major shipping hub in South Asia, while also acting as a geopolitical counterweight to China’s long-standing investments in the region, a Bloomberg report said.

“This project in particular serves deeper economic ties for Sri Lanka, India, and the United States,” Chulanee Attanayake, a researcher specializing in Sri Lanka’s foreign relations, told Bloomberg. “It’s not just an economic venture, but also a geopolitical statement.”

The US has also entered the fray, backing the port development with a $553 million loan through the US Development Finance Corp. The project signals Washington’s growing interest in curbing China’s expanding influence in Asia, particularly in countries like Sri Lanka, which have historically been part of China’s Belt and Road Initiative (BRI).

Uditha Devapriya, chief analyst at Factum, a Sri Lankan foreign policy think tank, told the South China Morning Post: "India is obviously going to look at this election with very, very sharp eyes." The outcome could significantly impact India's strategic interests in the region, especially given recent political shifts in neighboring countries.

Nilanthi Samaranayake, an adjunct fellow at the East-West Centre in Washington and a visiting expert at the US Institute of Peace, told SCMP that India would aim to maintain its cordial relations with Sri Lanka, considering the nation's crucial role as a neighbour in the region. This is particularly important in light of the potential difficulties that may arise from Bangladesh after Prime Minister Sheikh Hasina's ouster.

China's continued presence

• Despite India's recent push, China remains a major player in Sri Lanka. Between 2006 and 2022, China committed $11.2 billion in grants and loans for infrastructure projects in Sri Lanka, dwarfing the $97 million spent by the US during the same period, the Bloomberg report quoting AidData said.
• Nilanthi Samaranayake, a visiting expert at the US Institute of Peace, emphasizes that regardless of the election outcome, "The bilateral relationship [with China] is entrenched."
• While its infrastructure projects in Sri Lanka have been scrutinized, Beijing has recalibrated its approach to development financing in recent years, making efforts to ensure its loans are more sustainable for recipient countries. According to research by AidData, China globally spends around $80 billion in development finance for low- and middle-income countries, compared to $60 billion by the US.

The candidates and their implications
The election features several key contenders, each with potential implications for Sri Lanka's foreign relations
Incumbent President Ranil Wickremesinghe: Known for his diplomatic acumen, Wickremesinghe has maintained a delicate balance in relations with both India and China. His pro-India leanings, however, have been noted in his support for currency integration with the Indian rupee and welcoming of Indian investments.
Sajith Premadasa: Representing the Samagi Jana Balawegaya (SJB), Premadasa has been vocal in his opposition to some of Wickremesinghe's policies, particularly regarding Indian investments.
Anura Kumara Dissanayake: The NPP candidate's potential victory could significantly alter Sri Lanka's foreign policy orientation, potentially straining relations with India while opening doors for increased Chinese influence.
Namal Rajapaksa : The 38-year-old son of former President Mahinda Rajapaksa , Namal Rajapaksa represents the continuity of the Rajapaksa dynasty. Despite the family’s fall from grace, Namal is trying to rebuild their political base, focusing on the legacy of his father’s leadership during the end of the Sri Lankan civil war.


What’s at stake for Sri Lanka?
The outcome of this election will determine the direction of Sri Lanka’s economic recovery and its foreign relations. Wickremesinghe’s administration has positioned itself as a pro-Western, pro-India government, inviting investment from both while steering clear of over-reliance on China. A win for Wickremesinghe would likely maintain the current course, but with added pressure to deliver on economic promises.

Premadasa and Dissanayake offer contrasting visions. Premadasa, while not advocating for a complete pivot away from China, has emphasized the need for Sri Lanka to safeguard its economic sovereignty.

Dissanayake, with his leftist, populist platform, could introduce a more unpredictable dynamic into Sri Lanka’s foreign policy, particularly in relation to India. Analysts believe a Dissanayake victory could embolden China to strengthen its presence in the island, as his party has expressed greater openness to Chinese-backed investments than Indian projects.


Pollsters suggest that the race could head to a run-off for the first time in Sri Lanka’s history, delaying the final results. This uncertainty is heightened by the broader geopolitical stakes: both India and China are closely watching the election’s outcome, with potential shifts in Sri Lanka’s foreign policy impacting their own strategic interests in the Indian Ocean region.

(With inputs from agencies)