The $500 million development project holds high importance in the region, as the project has been stalled since 2016 due to major diplomatic manoeuvres between consortiums led separately by India and China to acquire the project.

New Delhi (Sputnik): India and Japan have struck an important tripartite agreement with Sri Lanka to jointly develop the "East Container Terminal" in the Port of Colombo. As per the agreement, a terminal operator company will be set up with the Sri Lanka Ports Authority holding a 51% stake and the rest being split between India and Japan.

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The Colombo Port is considered the most commercially viable project and has attracted around $1.4 billion investment from China under the Belt and Road Initiative.

The Sri Lankan government had planned to develop three terminals — South, West, and East — with a depth of 18 metres that will allow larger container ships to operate at the port. China Merchant Holdings completed the development of the South Terminal in 2013, while work on the East Terminal remains stalled due to diplomatic manoeuvring between India and China.

India-Japan, China-Qatar-Iran, along with the Sri Lanka Ports Authority, have expressed interest to develop the project as the deepest Container Terminal at the Port of Colombo, helping to berth massive ships, container carriers, and oil tankers.

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The project was also stalled due to changes in power in the island nation. Last year, local media reported Sri Lankan President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe had clashed during a Cabinet meeting, as the latter wanted the East Terminal to be given to India on a Public-Private Partnership (PPP) deal. But the president had strongly objected. Sirisena is reported to have said that after giving the Hambantota Port to the Chinese, he cannot agree to give a section of the Colombo Port to India.