China is making a sagacious move in India's backyard in order to enhance its influence in the Indian Ocean region. By exploring ways and means to bring Sri Lanka into its strategic ambit, Beijing is also making all out efforts to enhance its level of engagement with this strategically located island republic. China's recent entry into oil exploration in Sri Lanka, participation in development of port and bunker facilities at Hambantota, involvement in infrastructure development, strengthening military cooperation and boosting bilateral trade with Colombo should be cause of concern for New Delhi. Interestingly, in recent years, China has emerged as the biggest donor to Sri Lanka. The New York Times reported last week that Chinese assistance to the island republic has grown fivefold in the last year to nearly $1 billion, thus overtaking Sri Lanka's long-time and hitherto largest donor, Japan.

Despite India opposing Sri Lanka's reliance towards Pakistan and China for military hardware to strengthen its offensives against the LTTE, Colombo has recently inked significant defence agreements with Beijing. Some months back, the Janes Defence Weekly reported that Sri Lanka had signed a $ 37 million deal for supply of ammunition and ordnance from Poly Technologies, a subsidiary of China International Trust and Investment Corporation. Sri Lanka is also negotiating with the Chinese conglomerate for three additional mobile radars for deployments across the country.

Although this was not the first defence deal that Sri Lanka has had with China, it is significant insofar as it reflects unwillingness on the Sri Lankan government's part to dependent on India for its defence procurement needs. Besides China, Pakistan is another major supplier of arms to Sri Lanka. Their defence cooperation has expanded considerably in recent years. Pakistan supplies military equipment, especially small arms, to Sri Lanka. Two months back, a high level defence delegation from Pakistan visited Colombo and met senior officials. In November 2007, two Pakistan warships were docked in the Colombo port, which symbolised the enhancing of their naval cooperation. Indeed, India's reluctance to sign defence cooperation agreement with Sri Lanka and supply weapon systems could be seen to have compelled Colombo to explore other strategic partners.

Construction work on a new deep water port at Hambantota worth $ 360 million has already begun with Chinese assistance. The Chinese eagerness to participate in the Hambantota project is not just about economy but also linked to Sri Lanka's strategic location near strategic sea lines of communication. Many believe it is also about China's eagerness to undertake a strategic presence close to Indian shores. It was reported that contracts for Hambantota port were first offered to India by the Sri Lankan government but was then given to Chinese companies after India rejected. Thereby, India's loss has turned out to be China, much to the chagrin of Indian security planners.

After Gwadar and Sittwe, Beijing is seeking to further consolidate its presence in Indian Ocean through Hambantota. Chinese plans for Sri Lanka should thus be treated as part of its larger strategy of building a circle of road-and-port connections in India's neighbourhood, with an eye of strategic dominance over the Indian Ocean region. Some months back, Sri Lanka allocated an exploration block in the Mannar Basin to China for exploring oil resources. More than the oil business, the immediate fall out of this decision is the Chinese presence just a few miles away from India's southern tip, which is sufficient enough to cause discomfort.

In economic terms, this would also end the monopoly held by Indian oil companies in this area, placing them in competition with the wealthy Chinese oil companies. The Chinese presence would seemingly disturb the existing navigational space occupied by the Indian Navy, which has to circle the island nation, to transfer its naval fleets between the Bay of Bengal and the Arabian Sea. Similarly, military cooperation between Beijing and Colombo, especially in resolving the Sri Lankan ethnic strife, would seriously affect India's stakes in this issue.

On the other hand, China is also determined to reduce the trade deficit with Sri Lanka by making all efforts to explore the Sri Lankan market and increase the volume of imports from Sri Lanka. Bilateral trade between two countries made significant growth last year. The remarkable friendship between the two countries is evident in the proposed Norocholai Coal Power Plant and the construction of highways in the island nation. China is also planning to offer more concessions to Sri Lanka within the next two and half years under the Asia Pacific Trade Agreement (APTA) which will cover over 2,000 products being exported to China from Sri Lanka.

Traditionally India and Sri Lanka have enjoyed good relations. But the conventional neighbourhood policy adopted by India and the traditional anathema to proactive engagement in this policy formulation has created abundant scope for India's rivals to make noteworthy presence in the region and create major dents in India's existent sphere of influence. Unfortunately, India's foreign policy is more seen to be dictated by domestic political compulsions, at the cost of India's national security interests.

Hence, to maintain India's traditional influence in Indian Ocean region, it is imperative to proactively augment the cooperation with littoral states to a level of strategic partnerships, involving defence and economic cooperation, so as to sustain its leverage over the region as well as deny any space for competing powers like China to consolidate their presence and influence in the region.

Dr. Amit Kumar is Associate Research Fellow at the Observer Research Foundation, New Delhi, He can be reached at 000amit@gmail.com.