## 📈 India-Sri Lanka Strategic Update: 2026 Connectivity & Energy Goals

India is shifting its economic engagement with Sri Lanka from "announcements to execution" in 2026, focusing on infrastructure and energy integration following the post-Cyclone Ditwah recovery phase. • Key Infrastructure & Connectivity Land Connectivity: India is currently awaiting a response from the Sri Lankan government regarding a proposal for a Detailed Project Report (DPR) on the land bridge project. Post-Cyclone Support: A US$ 450 Mn assistance package is active, including US$ 350 Mn in concessional credit and US$ 100 Mn in grants. Implementation has begun with the opening of the first Bailey bridge in January 2026. Railways: Restoration of the Northern Railway line (Mahawa to Omanthai) is underway, with a target completion date before April 2026. • Energy & Maritime Hubs Power Grid: Technical details for the India-Sri Lanka power grid interconnection are finalized. Financial modalities are now being negotiated to link the two national grids. Trincomalee: Plans are progressing to develop Trincomalee as a regional energy hub, focusing on pipeline connectivity, bunkering, and tank farm development. • Investment & Trade FDI Shares: Indian investment accounted for nearly 25% of Sri Lanka's total FDI in 2025, reaching up to 50% when considering global subsidiaries. Trade Framework: India awaits Colombo’s decision on whether to upgrade the existing Free Trade Agreement (FTA) or pursue a more comprehensive ECTA. • Security Developments Sri Lanka has formalized a defense partnership with the U.S. Coast Guard and the Montana National Guard under the State Partnership Program (SPP), with joint maritime domain awareness activities planned for mid-2026. _Note: Data based on current diplomatic briefings and provisional project timelines for 2026._