-By LeN Business Correspondent
(Lanka-e-News -01.July.2025, 8.40 PM) In a development that underscores New Delhi’s sharpening focus on Sri Lanka’s strategic assets, India’s state-owned Mazagon Dock Shipbuilders Limited (MDL) has sealed a $53 million investment to rescue the ailing Colombo Dockyard PLC — a move widely seen as both a commercial venture and a geopolitical chess play.
The deal, announced jointly by officials from MDL and the Government of Sri Lanka, will inject much-needed capital into Colombo Dockyard, which has been weighed down by debt, mismanagement, and shrinking order books amid growing regional competition. More significantly, this move marks one of India’s boldest attempts to directly assert itself in the maritime infrastructure of the island nation, where Chinese state-owned enterprises have long enjoyed a strategic edge.
Colombo Dockyard, the oldest established shipbuilding facility in Sri Lanka, has suffered declining revenues and increasing liabilities over the past five years. The injection of Indian capital — and management — is being positioned as a “technical partnership” with India’s Mazagon Dock, which builds naval frigates and submarines for the Indian Navy.
But behind the balance sheets lies a broader strategy: India’s desire to reclaim strategic space in Sri Lanka’s maritime infrastructure, particularly as Colombo continues to flirt with Beijing over ports, energy terminals, and naval logistics.
According to Sri Lanka’s Ministry of Ports, the MDL infusion will help modernise the drydock infrastructure, scale up ship repair capacity, and bolster defence-related manufacturing. Indian officials quietly acknowledge that this deal is “not just commercial” but aims to build a strategic bulwark against China’s creeping influence.
The move comes amid increasing discomfort in New Delhi over China’s entrenched position at Hambantota Port, leased to China Merchants Port Holdings for 99 years in 2017. Despite years of promises from Sri Lankan governments to “rebalance” foreign influence, Chinese state-owned companies still dominate key port infrastructure, telecommunications, and energy projects.
“Colombo Dockyard, located adjacent to the Colombo International Container Terminal (CICT), is a node of strategic importance,” said Dr. S. Raghavan, a retired Indian Navy commodore and South Asia defence analyst. “If India hadn’t stepped in, Chinese investors — directly or via proxies — would have filled the vacuum. This is a long game, and India just took a knight’s move.”
The timing is no accident. Sri Lanka is deep in negotiations with global creditors to restructure its sovereign debt, and the government is seeking to privatise or capitalise state-owned assets to raise cash and avoid IMF-triggered austerity spirals. The Colombo Dockyard deal — reportedly fast-tracked through Sri Lanka’s Cabinet — comes with favourable terms for India, including the appointment of MDL-nominated directors on the Dockyard’s board.
Though framed as a rescue of an old Colombo-based dock, the MDL deal signals the early formation of what Indian policymakers are quietly calling a “South Asian Maritime Arc” — a network of Indian-backed naval repair, surveillance, and logistics facilities from the Andaman Islands to Sri Lanka and onward to the Seychelles and Mauritius.
Earlier this year, India also extended financial support for radar installations and coastal surveillance systems in the Maldives and Mauritius. Combined with India's recent diplomatic reset with Male under the new leadership, this investment in Colombo appears to be part of a grander strategy to regain initiative in the Indian Ocean Region (IOR).
“India is stitching together a strategic triangle,” notes Dr. Sujatha Roy, a maritime security expert at the Observer Research Foundation. “The Colombo Dockyard acquisition is about logistics, access, and projection. It allows India to develop local shipbuilding capacity just south of its maritime boundary — and keep a close watch on PLA Navy movements.”
For Colombo, the deal is a pragmatic lifeline. Colombo Dockyard has long struggled with technological obsolescence and debt overhangs, often operating at less than 50% capacity. India’s capital injection could enable Sri Lanka to recapture some of the regional ship repair business lost to Singapore and Dubai.
Moreover, Indian interest in Sri Lankan infrastructure sends a signal to global investors and lenders: Sri Lanka is still open for business — and not completely in China’s pocket.
“We welcome this partnership,” said Sri Lankan Minister of Ports and Aviation,. “It is not only an economic deal but also a demonstration of regional cooperation. This will create hundreds of jobs, boost local skills, and help revive our naval industrial capacity.”
Yet, critics in Colombo warn that the government must be cautious not to replace one form of dependency with another. “We sold strategic ports to China under one government and now we are handing over naval infrastructure to India,” said opposition MP Harsha de Silva. “The public must know what long-term conditions are attached.”
Interestingly, Beijing has not officially commented on the MDL-Colombo Dockyard deal. But Chinese analysts, quoted anonymously in the Lankaenews, described the development as “predictable” and “unlikely to affect China’s long-term investments in Sri Lanka.”
Privately, Sri Lankan Defence analysts, have expressed concern that India’s growing footprint in Sri Lanka could eventually extend to intelligence-sharing arrangements or joint naval exercises — moves that Beijing would perceive as hostile.
A diplomatic source in Colombo told LankaEnews, “We don’t believe Sri Lanka wants to be a pawn in the India-China rivalry. But if India expands its military presence in Colombo, China will certainly adjust its posture.”
The next phase will be crucial. Indian engineers and maritime advisors are expected to begin operations at Colombo Dockyard within three months. Meanwhile, Sri Lanka is negotiating with Japan and South Korea for additional investments in port logistics and shipbuilding — moves aimed at diversifying partnerships.
For now, India appears to have scored a quiet but significant victory in the regional great game. The real test, however, will be whether this investment leads to sustainable growth in Sri Lanka’s maritime economy — or simply becomes another geopolitical pawn on a turbulent board.
Located in Colombo Port’s northern precincts, minutes away from the Chinese-run Colombo International Container Terminal.
Offers drydock and ship repair services to merchant vessels, fishing trawlers, and small naval ships.
Founded in 1974 with Japanese technical assistance, but fell into financial trouble over the past decade.
Previously explored joint ventures with South Korean and Chinese firms but failed to close deals.
The Mazagon-Colombo deal may not grab global headlines like Hambantota once did — but it could be the first pebble in a shifting tide. As Sri Lanka struggles to keep its sovereignty afloat amid competing powers, India has signalled that it’s no longer content watching from the shore.
-By LeN Business Correspondent
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by (2025-07-01 15:10:08)
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