India is making a big move to outflank China in Sri Lanka

The India-China contest in Sri Lanka is entering a more consequential phase. What began as a competition over ports and infrastructure has now shifted into the energy sector, where control over fuel supply chains, storage and refining capacity carries deeper strategic weight. China’s recent move into Sri Lanka’s fuel distribution market and its long-term refinery ambitions have expanded its influence beyond fixed assets. India’s answer is to accelerate a trilateral energy architecture with Sri Lanka and the UAE anchored around Trincomalee and a cross-border oil pipeline.

Also Read: India-Sri Lanka oil pipeline discussed


Vice President CP Radhakrishnan and Sri Lankan President Anura Kumara Dissanayake on Sunday discussed the proposed link between India and the island nation through an oil pipeline, Foreign Secretary Vikram Misri said. "Some initiatives that are underway from the Indian side and some proposals that have already been discussed between the two countries, notable amongst them, the project related to the energy hub in Trincomalee and the proposal to link India and Sri Lanka through an oil pipeline. And in fact, the point was made as to the value of such energy connectivity, especially at a time like now, when the entire world and this region especially is facing the fallout of an energy crisis generated by the Situation in West Asia," Misri told reporters in Colombo after Radhakrishnan's first day of the visit.


The proposed project is India's bid to reshape energy dependence in the Indian Ocean by outflanking China which has a significant energy footprint in Sri Lanka that might grow with a planned refinery at Hambantota..

China’s energy strategy: From assets to market control

China’s presence in Sri Lanka’s energy sector has evolved in two distinct phases. The first phase focused on infrastructure. The Lakvijaya coal power plant, built with Chinese financing and contractors, remains the backbone of Sri Lanka’s electricity generation. It gives China a lasting role in the country’s power system.

The second phase, now unfolding, is more strategic. China is expanding into downstream energy. The planned Hambantota refinery led by Sinopec, though delayed, is designed to position Sri Lanka as a regional refining hub. Even more significant is Sinopec’s entry into Sri Lanka’s fuel import and retail market, which allows China to influence everyday energy consumption.

Also Read: India expands Russian marine insurance options

Sri Lanka expects Sinopec to begin work on the refinery soon while also expanding downstream operations. This combination of refining and retail would give China presence across the value chain. In effect, China is attempting to move from building infrastructure to shaping how energy flows inside the country.

This layered approach matters because it reduces reliance on any single project. Even if the refinery is delayed, control over fuel distribution ensures continued influence.

India’s existing strength: Supply chains and crisis leverage

India’s energy footprint in Sri Lanka is less visible but more embedded in daily operations. Through Indian Oil Corporation and its subsidiary Lanka IOC, India already operates across fuel import, storage and retail. This network proved decisive during Sri Lanka’s economic crisis, when India supplied large volumes of fuel and financial assistance.

Unlike China’s infrastructure-heavy model, India’s presence is built around supply chains. It is not dependent on a single large project. Instead, it rests on the ability to deliver fuel quickly and reliably. This difference is crucial. Infrastructure creates long-term influence, but supply chains create immediate dependence. India has leveraged this advantage repeatedly, especially during disruptions triggered by global energy shocks. The proposed pipeline is an extension of this strategy.

The Trincomalee project represents India’s attempt to scale up its approach. It is not just about redeveloping the oil tank farm, a World War II-era storage facility. It is also about building a full-fledged energy hub that integrates storage, refining potential, and regional distribution. What distinguishes this project is the involvement of the United Arab Emirates. India and the UAE agreed to jointly develop the Trincomalee hub, with plans including a multi-product pipeline, bunkering facilities and possibly a refinery.

The UAE’s participation is not incidental. It brings capital, global energy market access and technical expertise. It also transforms the project from a bilateral initiative into a broader geopolitical alignment. Trincomalee’s geography adds to its importance. Located on Sri Lanka’s eastern coast, it sits close to major shipping lanes and offers one of the finest natural harbours in the region. This makes it ideal for an energy hub that can serve both domestic and regional markets.

The pipeline: The missing strategic link

The most critical component of India's energy play is the proposed India–Sri Lanka oil pipeline. This project, now reaffirmed during Vice President C. P. Radhakrishnan’s visit, has been under discussion since 2023 and was formalised through a trilateral agreement in 2025 involving India, Sri Lanka, and the UAE. The pipeline and oil hub are central to the latest bilateral talks, with both sides agreeing that there is no further time to lose in advancing them.

The project envisions a multi-product pipeline connecting India to Sri Lanka, feeding into the Trincomalee storage complex.

This changes the strategic equation in several ways. It reduces Sri Lanka’s dependence on seaborne oil imports. At present, the country imports all its oil requirements, making it vulnerable to global disruptions. It will also create a direct and continuous supply link from India’s refining system. This would make India not just a supplier of last resort but a permanent energy partner. By integrating pipeline, storage and retail, it allows India to build an end-to-end energy network inside Sri Lanka.

Countering China

The India-China rivalry in Sri Lanka’s energy sector is now defined by two competing models. China’s approach is asset-centric. It focuses on building large infrastructure such as power plants and refineries, then expanding into downstream markets. The goal is to create long-term stakes in the country’s energy system.

India’s approach is network-centric. It seeks to connect supply, storage, and distribution into a single system anchored in proximity and reliability. The Trincomalee hub and pipeline are India’s attempt to match and counter China’s expanding footprint. If China’s Hambantota refinery is about controlling processing capacity, India’s pipeline is about controlling supply routes.

The involvement of the UAE adds another layer to this competition. It brings in a third major energy player aligned with India, strengthening the project’s financial and strategic viability. This trilateral framework contrasts with China’s largely bilateral engagement.

Sri Lanka is balancing competing powers

Sri Lanka is not a passive arena in this rivalry for India and China. It is actively engaging both the countries to secure investment, technology and energy security. By allowing Sinopec into its fuel market while simultaneously advancing the Trincomalee project with India and the UAE, Sri Lanka is pursuing a balancing strategy. This enables it to diversify partnerships and avoid overdependence on any single country. However, this balance is delicate. Energy infrastructure creates long-term dependencies. Whether Sri Lanka leans more toward China’s infrastructure model or India’s supply chain model will shape its strategic orientation.

India-China regional contest is escalating

The renewed push for the Trincomalee oil hub and the India-Sri Lanka pipeline marks an escalation in the India-China rivalry in Sri Lanka. This is no longer a contest over isolated projects but a competition to define the architecture of energy supply in the island nation. China is moving to embed itself across infrastructure and distribution. India, backed by the UAE, is trying to anchor supply routes and integrate them with storage and retail networks. If completed, the pipeline and Trincomalee hub could fundamentally alter Sri Lanka’s energy dependence, tying it more closely to India. If delayed, China’s expanding downstream presence could fill the gap.

The stakes extend beyond Sri Lanka. What is being shaped here is a model of influence in the Indian Ocean, where energy flows too determine strategic power.