Sri Lanka halts port deal with India and Japan

Sri Lanka on Tuesday scrapped a deal to develop a major port terminal with India and Japan amid weeks-long protests by trade unions and opposition parties while India called on its neighbour to honour the agreement. Sri Lanka had previously agreed to develop the strategic East Container Terminal at the Colombo port with India and Japan.

Sri Lanka on Tuesday scrapped a deal to develop a major port terminal with India and Japan amid weeks-long protests by trade unions and opposition parties while India called on its neighbour to honour the agreement. Sri Lanka had previously agreed to develop the strategic East Container Terminal at the Colombo port with India and Japan. Under the deal, 49 per cent of the terminal's shares were to be owned by India and Japan while Sri Lanka's Ports Authority would retain the majority stake.

But on Tuesday, Sri Lanka's government declared the East terminal "a wholly owned container terminal of the Sri Lanka Ports Authority." The government said it would instead develop the port's West Container terminal with investment from India and Japan.

The Indian embassy in Colombo said India expects the timely implementation of the agreement the three countries signed in 2019.

"The commitment of Government of Sri Lanka in this regard has been conveyed several times in the recent past, including at the leadership level. Sri Lanka cabinet also took a decision three months ago to implement the project with foreign investors," the embassy said in a response sent via WhatsApp.

"All sides should continue to abide by the existing understandings and commitment" the embassy added.

There was no immediate comment from Japan.