As Sri Lanka battles to resurrect its tattered economy, it has thrown open its door to Indian companies to invest there.

On Saturday, External Affairs Minister S Jaishankar held talks with Sri Lankan Finance Minister Basil Rajapaksa to discuss ways to enhance cooperation including economic and business between the two countries.

“This is an opportunity for India to balance China’s hold over Colombo,” said a foreign policy watcher.

Foreign direct investment (FDI) from India into Sri Lanka amounted to about US$ 1.7 billion during the period 2005 to 2019, according to the Indian High Commission there. The main investments from India are in the areas of petroleum retail, tourism & hotel, manufacturing, real estate, telecommunication, banking and financial services, it said.

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India has also announced a $900 million loan to the island nation. This is expected to boost the country’s depleting foreign reserves.

Earlier this month, Sri Lanka’s Cabinet gave its approval to India for jointly developing the World War II era Trincomalee oil tank farm, a move that would give a big push to New Delhi. The deal will also help India balance China’s presence in the island nation.

This oil farm facility built by the British as a refuelling station, has a storage capacity of about 1 million tonnes, which is significantly higher than Sri Lanka’s demand.

Under this fresh agreement, Lanka IOC, the subsidiary of Indian Oil will have 49 per cent stake in the joint development of the oil farm while the remaining 51 per cent stake will remain with Ceylon Petroleum Corporation.

While the proposal to jointly develop and modernize this facility was laid down 35 years ago, in the Indo-Lanka Accord 1987, progress on this had been slow until now.