India extends gap finance to continue ferry service to Sri Lanka
EconomyNext: India has extended financial assistance of Rs. 300 million for the passenger ferry service between Nagapattinam and Kankesanthurai for another year, its High Commission in Colombo said on Friday.
The latest assistance marks the third consecutive year of financial support from India for the ferry service, which resumed in August 2024.
“The financial support is being extended under the Viability Gap Funding mechanism, amounting to nearly LKR 300 million annually,” the High Commission said in a statement.
“The assistance is aimed at ensuring the affordability and operational sustainability of the service by covering key logistical and operational costs, on terms similar to the previous year.”
Since resuming in August 2024, the ferry service has facilitated the movement of around 52,000 passengers, significantly contributing to cultural, economic and social exchanges between India and Sri Lanka.
The service represents an important milestone in revitalizing maritime connectivity between the two countries, the High Commission said.
The continuation of financial support for the ferry service also aligns with the shared vision for enhanced maritime connectivity, as reaffirmed during the visit of the President of Sri Lanka to India in December 2024 and the visit of the Prime Minister of India to Sri Lanka in April 2025, it said.
“Future plans include rehabilitation of Kankesanthurai Harbour under overall Indian grant assistance of US$ 65 million, as well as exploration of additional routes and services that could further expand maritime connectivity and deepen economic and people-to-people linkages between India and Sri Lanka.”
OSL take:
The continuation of India’s financial support for the Nagapattinam–Kankesanthurai passenger ferry service could help strengthen not only people-to-people connectivity but also the growing business and investment relationship between Sri Lanka and India. With the ferry service facilitating the movement of around 52,000 passengers since its resumption in August 2024, improved maritime access is creating greater business/investment opportunities for entrepreneurs, traders, investors and professionals from both countries to explore markets beyond the traditional air and sea links. The service could be particularly significant for businesses in northern Sri Lanka and southern India, where shorter and more convenient connectivity can support tourism, small-scale trade, services and commercial exchanges. Greater movement of visitors can also create demand for accommodation, transport, retail, food and other tourism-related businesses. For Indian companies and investors, easier access to Sri Lanka could provide an additional channel to explore opportunities in sectors ranging from tourism and logistics to manufacturing, renewable energy, agriculture and services. At the same time, Sri Lankan businesses could use improved connectivity to explore customers, suppliers, partnerships and investment opportunities in India. The ferry, therefore, represents more than a transport link. As economic ties between the two countries deepen, sustained connectivity could help bring businesses and investment opportunities closer together, particularly between the northern regions of Sri Lanka and southern India. India’s latest nearly Rs. 300 million in Viability Gap Funding, extending support for a third consecutive year, is aimed at keeping the service affordable and operationally sustainable. This could provide the continuity needed for the ferry to become a more established component of bilateral commercial and tourism connectivity. As Sri Lanka seeks to attract greater foreign investment and Indian businesses continue to expand their regional presence, reliable and affordable connectivity will remain an important part of creating practical opportunities for two-way investment and trade.
| Article Code : | VBS/AT/20261001Z_1 |