Linking with South Indian states for economic prosperity

Our giant neighbour India is projected to become the world’s third largest economy by 2028 and by 2032 the world’s most populous state is expected to possess a $ 10-trillion economy. There is common consensus among the Indian intelligentsia that South Indian states Andhra Pradesh, Kerala, Karnataka, Telangana and Tamil Nadu will lead the economic development drive of the emerging Asian superpower. 

The southern states of India have become the country’s economic engine and the strongholds of social progress. The region attracts multinational IT services, pharmaceutical, food processing, and automobile manufacturing firms while retaining the strength of its agriculture sector. It is estimated that nearly one-third of India’s GDP in 2023-24 came from southern states, with Tamil Nadu and Karnataka being the top contributors.

As embodied in Viksit Bharat 2047 – whichh envisions India becoming a developed nation by the centenary of its independence in 2047 – the South Asian giant intends to become a $ 30-trillion economy with a per capita income of $ 18,000. The Indian development planners are hopeful that progressive southern states will anchor the economic development of the country due to the high standards of education and diverse economic base with a strong presence in IT, manufacturing, and services. The state of Tamil Nadu, with which Sri Lanka had close cultural and people-to-people ties for centuries, is all poised to become an economic powerhouse with a target of becoming a $ 1-trillion economy by 2030. It is already India’s second largest state economy. The Upcountry Tamil community came to Sri Lanka when they were brought as indentured labourers by the British to work in tea, coffee, and rubber plantations during the 19th and 20th centuries. The members of the community still maintain their cross-border ties and such amicable personal relations could be capitalised to deepen economic integration with the southern regional economies of the neighbouring republic.

Already India is Sri Lanka’s largest trading partner and the India-Sri Lanka Free Trade Agreement (ISFTA), which came into effect in March 2000, contributed significantly towards the expansion of trade between the two countries. More than 60% of Sri Lanka’s total exports to India over the past few years have made use of the ISFTA benefits, while only about 5% of India’s total exports to Sri Lanka during the past few years have benefited the provisions of the FTA. A greater integration with regard to economic cooperation would undoubtedly enable the island to attract worthwhile foreign direct investments from the economically prosperous southern regions of India. The recent signing of the MoU between the two states to establish a High Voltage Direct Current (HVDC) interconnection – which intends to build a 285-kilometre-long transmission system, including 50 km of submarine cables beneath the Palk Strait, connecting Madurai in Tamil Nadu with Anuradhapura – will represent a vital component of the island’s economic cooperation with the south of India in the years to come. The grid connection would enable Sri Lanka to export excess renewable energy to India and enhance energy security by ensuring a two-way flow of electricity. The project could also create jobs and attract investments to renewable energy projects in Sri Lanka.

During the presidency of Ranil Wickremesinghe, bilateral discussions took place to explore the possibility of constructing a $ 5-billion bridge and railway line over the Palk Strait, enhancing connectivity between the two countries. Such enhanced land connectivity would offer significant economic and trade benefits to Sri Lanka, including reduced transport costs and increased access to the Indian market.

Nevertheless, anti-Sri Lankan attitudes of Tamil Nadu politicians stand as bottlenecks in terms of enhancing the economic cooperation between South India and Sri Lanka. The NPP administration needs to explore ways and means to establish a certain level of rapport and understanding with the influential political leaders of Tamil Nadu.