India's Keen Eyes On Sri Lanka's EOI Offer To Lease Airport Near Hambantota Port

New Delhi : India is closely monitoring Sri Lanka's decision to offer foreign investors control of an airport near the China-controlled Hambantota port, as it could present a rare opening for Indian firms seeking strategic footholds in the Indian Ocean, people familiar with the matter said on Sunday. The Sri Lankan government has already called for expressions of interest from domestic and international investors by June 9 to take control of the Mattala Rajapaksa International Airport (MRIA) in Hambantota under a 30-year build-operate-transfer (BOT) model.

In 2017, China gained control of the strategic Hambantota port through a 99-year lease that had raised concerns in New Delhi in view of the location of the mega transit hub.

New Delhi is watching the new opportunity with a keen eye, as both neighbouring countries have been looking to forge greater trade and strategic relations following Prime Minister Narendra Modi's visit to the island nation in April last year.

The Mattala Rajapaksa International Airport, located about 250 km from the capital Colombo, has endured a troubled first decade, the people said.

Launched in 2013 with grand ambitions, the project cost USD 209 million, funded primarily by China's Export-Import Bank. However, despite having a swanky terminal building and a 3,500-metre runway, it failed to draw the passenger traffic and airline commitments required for commercial survival.

For years, the facility languished underutilised and mocked globally as the "world's emptiest airport."

Now, the Sri Lankan government has issued a fresh Expression of Interest (EoI), inviting strategic investors -- domestic and international -- to take over, operate, and transform MRIA into a modern aviation hub.

The EoI presents two independent investment tracks. The first is aerodrome operations -- a management contract for civil airport operations, requiring a minimum of five years' relevant aviation experience or operation of at least one international airport handling over one million passengers annually, the people cited above said.

The second is landside operations, offered on a BOT model with a 30-year lease and extension provisions. It will provide for the development of 238 hectares of land, comparable in scale to the Chinese-developed Colombo Port City but without any of the political risks, they said

The land parcel can be used for setting up maintenance, repair and overhaul (MRO) facilities, a flying school, logistics parks, solar installations, industrial parks, and resort hotels.

Crucially, the two tracks are independent: investors can enter via landside operations alone, airside alone, or both -- allowing meaningful flexibility to build a diversified, de-risked portfolio, the people said.

From India's perspective, they said, the project has a strategic dimension against the backdrop of China's increasing attempts to expand its political and economic influence over the island nation.

"An Indian presence in Hambantota will be a tangible expression of India's Neighbourhood First policy and Vision MAHASAGAR commitment to the Indian Ocean region, especially as a confidence-building investment in a close partner," said one of the people.

Explaining the importance of the project, the people said India's aviation sector is the world's fastest-growing and its MRO industry is under significant capacity pressure.

Mattala's long runways, uncongested airspace and generous land footprint make it a natural candidate for an MRO hub serving Indian carriers -- reducing turnaround times and costs while establishing a genuine Indian Ocean base, they said.

A flying school here makes equal sense: pilot training capacity in India is stretched, and Mattala's uncongested skies are an asset, not a liability, they noted.

The landside opportunity is also highly attractive as it includes 238 hectares of government-leased land perfect for industrial parks, logistics, and solar projects, they said.

Because Sri Lanka is actively courting Indian investment and shares preferential trade access with India, a strategic opportunity like this is rare in the region, they added.

The new opportunity comes one-and-a-half years after a planned project close to Mattala by certain Indian investors didn't fructify.

The previous government had nearly finalised a 30-year lease with an Indo-Russian joint venture anchored by Shaurya Aeronautics Pvt. Ltd, but the deal could not materialise following a change in the government.

The current EoI is a clean, fresh start and the strategic logic is stronger than ever, the people said.