In a landmark trilateral development, India and the United Arab Emirates have joined hands with Sri Lanka to create a major energy hub in Trincomalee, a move that not only strengthens regional energy cooperation but also marks a strategic counter to China's growing footprint in the Indian Ocean region.

This collaboration was formalized during Indian Prime Minister Narendra Modi's recent visit to Colombo, the first by a foreign head of state since Sri Lankan President Anura Kumara Dissanayake took office. The agreement signals India’s intent to deepen its economic and strategic engagement with its island neighbor, which has historically been a hotspot for influence struggles between New Delhi and Beijing.

At the heart of the deal is the plan to build a multi-product pipeline and modernize the storied Trincomalee oil tank farm—an expansive storage facility dating back to World War II. The facility is already partially operated by Lanka IOC, a subsidiary of the Indian Oil Corporation. With the involvement of the UAE, which is stepping in as a key energy partner, the hub is expected to evolve into a regional powerhouse for fuel storage, distribution, and logistics.

Indian Foreign Secretary Vikram Misri highlighted that this trilateral model—where India and the UAE jointly invest in another country’s infrastructure—could serve as a template for future regional collaborations. He noted that such ventures not only solidify economic bonds but also enhance strategic alignment among partner nations.

The move comes at a crucial time for Sri Lanka, which is still grappling with the aftermath of a crippling financial crisis that unfolded in 2022. During that period, India emerged as a key supporter, extending nearly $4 billion in aid and credit lines to help stabilize the country’s economy. This latest energy partnership reflects a shift from short-term relief to long-term infrastructure and investment strategies.

However, the energy hub initiative is not without its geopolitical implications. China has already established a strong economic presence in Sri Lanka, most notably through the development of the Hambantota Port, which is now leased to a Chinese state-owned company. More recently, China’s Sinopec pledged a massive $3.2 billion investment to build a refinery in the same southern region. The Trincomalee project, therefore, is widely viewed as India’s strategic response to China’s deepening influence.

The energy hub is expected to boost Sri Lanka’s role as a logistics and energy gateway in the Indian Ocean, offering economic benefits like job creation, fuel security, and infrastructure upgrades. For India and the UAE, it represents not only an opportunity to support a regional ally but also a chance to assert their presence in a rapidly evolving global energy landscape.

This trilateral cooperation marks a significant step forward in regional diplomacy and energy geopolitics, signaling a more assertive Indian foreign policy and a broader strategic alignment with the Gulf states, especially in the face of rising Chinese influence.