By Hirun Matheesha
Two months ago, Sri Lanka found itself in a particularly delicate diplomatic position as a result of the sharp rise in tensions between India and Pakistan following the Pahalgam attacks.
Sri Lanka has long taken pride in remaining non-aligned with rival regional powers. Yet throughout its modern history, it has been caught between defending its interests as a nation and staying out of geopolitical conflicts that it cannot afford to ignore or control. This is a dilemma that has more or less been accepted as a given for Sri Lanka.
Indo-Pakistan Relations Today
The latest crisis began after a terrorist attacked Pahalgam in Kashmir on April 22, 2025, leaving 26 civilians dead. India quickly accused militant groups based in Pakistan of carrying out the attack and retaliated with a mix of diplomatic and military actions.
India’s initial military reaction, as predicted, was a series of pinpointed strikes. The government dubbed the campaign “Operation Sindoor.”
In line with this a series of unprecedented actions were taken, including the suspension of the 1960 Indus Waters Treaty, a 64-year-old water sharing pact that transcended wars. Significant disruptions to regional travel and commerce resulted from India and Pakistan closing their respective airspaces.
Pakistan’s response was as sharp. The government warned that if the flow of the Indus River was disrupted from India’s side, it would be regarded as an act of war. For a while it seemed as though the region would be embroiled in a conflagration.
And yet, it ended with an anticlimax. After four days of military conflict, featuring drone and missile strikes, India and Pakistan declared a ceasefire on May 10, 2025. International diplomatic efforts, particularly those of the United States, used trade negotiations as leverage to persuade both nations to stop hostilities.
India and Pakistan continue to have a strained diplomatic relationship despite the conflict being no longer active. At the “Shangri-La Dialogue” in Singapore, military leaders from both nations exchanged warnings, with India’s Chief of Defense Staff, General Anil Chauhan, emphasizing a “red line” against terrorism.
This regional crisis placed Sri Lanka at a crossroads, as we are geographically close to India, economically linked to both neighbors, and historically allied with each.
Impacts and Ramifications for Sri Lanka
The most direct effect is obviously economic. Friction between India and Pakistan leads to regional instability that spooks investors.
This is a price it can hardly afford for a small, trade-dependent island country like Sri Lanka, which is already navigating post-crisis economic recovery. Threats of an escalated conflict in South Asia also tend to discourage long-term foreign direct investment (FDI), as international investors become more cautious of the geopolitical environment in the region.
Tourism is one of Sri Lanka’s most important industries, and it is especially susceptible. During the Pulwama-Balakot standoff in 2019, India and Pakistan had closed their airspace against each other temporarily, affecting other regional air routes and resulting in flight diversions and cancellations.
Indian tourists constitute the biggest source market for Sri Lanka, accounting for over 20 percent of arrivals prior to the pandemic. They were the hardest hit. The Sri Lanka Tourism Development Authority (SLTDA) reported that a significant amount of revenue was lost during that period as well as highlighting its dependence on regional peace.
Diplomatically, the India-Pakistan rivalry has evolved into a complex trilateral dynamic involving China, which has strengthened its strategic alignment with Pakistan. This has been commented on by several scholars and analysts. Uditha Devapriya, for instance, calls it Sri Lanka’s diplomatic trilemma.
All this has increasingly encroached on Sri Lanka as it deals with all three powers. China’s greater presence in Sri Lanka, in the form of various investment initiatives, predictably puts an additional spin to Colombo’s foreign policy considerations.
Furthermore, the hostility between India and Pakistan has crippled multilateralism through institutions like the South Asian Association for Regional Cooperation (SAARC). The most recent SAARC summit took place in 2014, following which India refused to participate until Pakistan suspended its terrorist campaign, leaving the institution paralyzed.
For Sri Lanka, this paralysis has closed an important forum for regional commerce and integration. What one can say with any degree of certainty is that the Indo-Pakistani rivalry has worsened Sri Lanka’s already complicated regional positioning.
Economic uncertainty, diplomatic challenges, the decline if not retreat of regional forums leave the country caught in a crossfire it did not choose, and it yet cannot ignore.
India’s “Neighborhood First” Policy and Sri Lanka
India’s Neighborhood First policy, emphasized under Prime Minister Modi, aims to make India the pre‑eminent partner of its neighbors through economic and strategic ties. For Sri Lanka, this has meant a surge of Indian engagement, New Delhi has offered large loans, development assistance, and infrastructure plans.
But this policy has a double edge; it presumes that neighbors will align with India’s security views. In practice, Delhi expects Colombo to side with it on the Kashmir dispute and to limit ties with Pakistan. The rapid cancellation of the Pakistan naval drill in Trincomalee illustrated India exerting influence.
Sri Lanka is navigating this carefully. It has no choice. President Dissanayake has publicly praised India’s support and awarded Prime Minister Modi Sri Lanka’s highest honor, but he has also asserted Sri Lanka’s independence on certain matters.
A recent example is the land‑bridge connectivity project. The Wickremesinghe government had enthusiastically promoted a rail/road bridge across the Palk Strait, but Dissanayake’s government informed India in April 2025 that it was “not ready” for such physical connectivity.
The move was seen as a deliberate signal that Sri Lanka would not become a satellite state. Clearly, “Neighborhood First” makes India a hugely important partner, but Sri Lanka is using its new political mandate to ask, “What’s in it for us?” Colombo benefits from Indian aid, but it also reminds India that patronage comes with no binding obligations.
Historical Lessons and Future Strategy for Sri Lanka
Sri Lanka gained independence in 1948 and often served as a moderating force in South Asia. Its leaders embraced non-alignment, refusing to join either Western or Soviet blocs. Similarly, Sri Lanka has traditionally avoided taking sides in Indo-Pak conflicts.
In 1971 when India and Pakistan went to war over Bangladesh, India shut Pakistan’s planes out of Indian airspace. In fact, during the 1971 Indo-Pakistani War, Sri Lanka permitted Pakistani aircraft to refuel at Bandaranaike International Airport, demonstrating a neutral stance in the conflict. Later, Sri Lanka balanced this by declining Pakistan’s request for its airspace when India protested.
The 1971 incident taught Colombo that small states can wield autonomy by offering niche support, but it also reminded Sri Lanka of India’s sensitivity about Pakistan’s military use of its territory. In other regional crises like the 1965 India–Pakistan War, 1999 Kargil Conflict, Sri Lanka largely remained neutral.
Indeed, during the Sino-Indian War of the 1960s, Prime Minister Sirimavo Bandaranaike even tried to mediate a border stand-off between India and China, illustrating Sri Lanka’s self-image as an honest broker.
In the 1970s and 1980s, Sri Lanka voiced support for a nuclear‑free South Asia, backing UN resolutions after India’s 1974 test, instead of praising one side. Simply, Sri Lanka’s best survival strategy has been neutrality and quiet diplomacy.
From these precedents, Sri Lanka derives its current playbook: stay neutral, seek dialogue, and avoid commitment to either camp. It avoids public condemnations of Pakistan or Kashmir policy beyond general calls for peace and likewise refrains from backing Pakistan’s narrative at India’s expense. It remains a non‑aligned actor even when pushed.
Moving forward, Colombo faces the task of safeguarding its national interest while avoiding conflicts, speaking out without causing offense, and standing firm without faltering. In a region where every word makes an impact and every action is significant, our foreign policy needs to be proactive.
At the heart of it, Sri Lanka’s story is not just about balancing neighbors. It’s really about finding our voice in a rather loud room. A voice that needs to stand for peace, stability, and honor – not just for today, but for the generations to come.
Hirun Matheesha is a first-year Management and Finance student at the University of Colombo and the Sri Lanka Law College with a keen interest in debating and public speaking, international relations, and Sri Lanka’s economic and foreign policy. He can be reached at hirun.m13@gmail.com.
Factum is an Asia-Pacific-focused think tank on International Relations, Tech Cooperation, and Strategic Communications accessible via www.factum.lk
The views expressed here are the author’s own and do not necessarily reflect the organization’s.
