Sri Lanka’s traditional policy of non-alignment is under unprecedented strain as it navigates the escalating rivalry between India, backed by the United States, and Pakistan, supported by China. The island nation’s recent deepening of security ties with India—highlighted by the landmark defence cooperation agreement signed in April 2025 during Prime Minister Modi’s state visit—marks a significant shift in its foreign policy posture.

This pact, the first of its kind since the 1980s, includes provisions for joint military exercises and capacity-building, though its full details remain undisclosed.

The timing of this agreement, just ahead of India’s Operation Sindoor—a military response to a terrorist attack in Kashmir attributed to Pakistan-based militants—has placed Sri Lanka in a precarious position. The operation, and the broader India-Pakistan confrontation, has heightened regional tensions and forced Colombo to carefully weigh the potential fallout, especially as both India and China are pivotal to its economic recovery and stability.

China’s strategic partnership with Pakistan has grown stronger under the Belt and Road Initiative, with major investments like the China-Pakistan Economic Corridor and military cooperation, including the supply of advanced fighter jets. Beijing’s robust support for Islamabad, particularly in the context of Operation Sindoor, underscores the geopolitical complexities Sri Lanka faces. Any perceived alignment with India’s security objectives could prompt China to reassess its engagement with Colombo, given Sri Lanka’s critical role in projects like the Colombo Port City and the China-run Hambantota International Port.

Economically, Sri Lanka remains heavily dependent on both powers. China holds about 20 percent and India 9 percent of Sri Lanka’s total public external debt, making both countries essential players in the nation’s $2.9 billion IMF debt-restructuring deal. This dual dependence complicates efforts to maintain neutrality, as economic leverage can easily be weaponized in the region’s shifting power dynamics.

Domestically, Sri Lankan leaders have reiterated their commitment to non-alignment. Cabinet spokesperson Dr. Nalinda Jayatissa emphasised that Sri Lanka’s territory would not be used by any country against another, reaffirming the nation’s refusal to be drawn into regional conflicts. However, President Anura Kumara Dissanayake’s strong condemnation of the Kashmir attack and expression of solidarity with India was viewed in Pakistan as a tacit alignment with New Delhi, illustrating the diplomatic tightrope Colombo must walk.

Operation Sindoor, has placed smaller South Asian states – particularly Sri Lanka – in a precarious position, forcing them to weigh how the fallout could reverberate across the region. The island nation just off India’s southern coast is treading carefully to avoid being drawn into the crossfire between its nuclear-armed neighbours, the report added.

Sri Lanka’s balancing act is further complicated by ongoing Indian concerns over Chinese activities in the Indian Ocean, including the regular arrival of Chinese research vessels and plans for a new oil refinery near Hambantota. India’s assertiveness, combined with Beijing’s expanding influence, leaves Colombo with little margin for error as it seeks to avoid alienating either side.

Sri Lanka is navigating a complex web of geopolitical pressures. Its recent tilt towards India in the security domain risks unsettling its delicate balance, especially as it remains economically beholden to both India and China. The current environment demands deft diplomacy, as any misstep could provoke economic or strategic repercussions from either camp. As a small state situated between rival superpowers, Sri Lanka’s ability to maintain its non-aligned stance will be tested as regional tensions continue to mount.

SCMP Chinese Media Report