Modi arrived in Colombo on Friday evening after attending the Bimstec (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) Summit in Bangkok.

Indian officials said the ceremonial welcome for Modi at Independence Square – which is the venue for national day celebrations and takes its name from the Independence Memorial Hall built to commemorate Sri Lanka’s independence from British rule in 1948 – was the first time a foreign leader was given such an honour.

External affairs ministry spokesperson Randhir Jaiswal said in a social media post that the talks between Modi and Dissanayake would foster a partnership for a shared future and mutual prosperity of the two sides.

Following one-to-one talks between the two leaders, they went into a meeting with their delegations. The two sides are expected to unveil about 10 outcomes, including agreements on defence cooperation, inter-connection of the electricity grids of the two countries and the development of an energy hub at Trincomalee in collaboration with the United Arab Emirates (UAE).

Also Read: PM Modi in Sri Lanka: Colombo gives rare welcome to PM; Major deals likely

The memorandum of understanding (MoU) on defence cooperation, which will be the first such agreement between the two countries, will institutionalise joint exercises, training and high-level exchanges and possibly lead to cooperation in defence industry, people familiar with the matter said.

More significantly, the MoU will help turn the page on India’s troubled intervention in Sri Lanka’s civil war, in the form of the Indian Peace Keeping Force (IPKF) that was deployed in the island nation between July 1987 and March 1990. Modi will also visit the IPKF Memorial in Colombo on Saturday to pay tribute to the 1,155 Indian soldiers killed in Sri Lanka.

Modi’s visit to Sri Lanka comes at a time when the island nation is showing signs of recovery from its worst economic crisis in 2022. India’s financial assistance of more than $4 billion, including credit lines and a currency swap arrangement, played a crucial role in helping Sri Lanka tide over the crisis.

Modi and Dassanayake will also inaugurate several India-backed projects and witness the virtual ground-breaking for the Sampur solar energy project.

On April 6, Modi and Dissanayake will travel together to the historic city of Anuradhapura, where they will pay their respects at the Mahabodhi temple and jointly inaugurate two India-assisted railway projects.

PM Modi on Saturday morning also received a ceremonial welcome at the Independence Square, where he was received by Sri Lankan President Anura Kumara Dissanayake.

PM Modi in Sri Lanka

PM Modi took to microblogging platform X and thanked the officials who received him, stating, “Landed in Colombo. Grateful to the ministers and dignitaries who welcomed me at the airport. Looking forward to the programmes in Sri Lanka.”

India and Sri Lanka are set to announce around 10 significant agreements during PM Modi’s visit to Sri Lanka, including key partnerships in defence, energy security, and digitalisation, a news agency PTI report said.

The discussions, scheduled for Saturday between PM Modi and President Anura Kumara Dissanayake, are expected to mark a new chapter in bilateral cooperation between the two nations.

PM Modi, who reached Sri Lanka after concluding a two-day visit to Thailand, was also welcomed by a group of Indian-origin people at his hotel, the Taj Samudra, where he is staying for the duration of his three-day trip.

This marks the first time that Dissanayake, in his capacity as president, will host a foreign leader. PM Modi’s last visit to Sri Lanka was in 2019.

What is on agenda

PM Modi and Dissanayake will hold both one-on-one and delegation-level talks, which are expected to result in at least 10 major outcomes, including a defence cooperation agreement and expanded collaboration in the energy sector, the PTI report said.

The potential signing of an MoU on defence cooperation is seen as a key development in India-Sri Lanka relations, signaling a new phase in defence ties after the contentious withdrawal of the Indian Peace Keeping Force (IPKF) from Sri Lanka over three decades ago.

PM Modi’s visit comes at a time when Sri Lanka is recovering from the severe economic crisis that hit the country three years ago. India played a crucial role in providing financial assistance worth $4.5 billion to support Sri Lanka during its time of need.

Following the talks, two key documents related to India’s support for Sri Lanka’s debt restructuring and currency swap are expected to be made public. The two nations are also likely to sign agreements on cooperation in the digital sector.

During P Modi’s visit, several India-assisted projects in Sri Lanka will be inaugurated, including the virtual groundbreaking of the Sampur solar energy project, which is expected to be a milestone in the bilateral partnership.

PM Modi and Dissanayake will also travel to the historic city of Anuradhapura on April 6, where they will pay their respects at the Mahabodhi temple and jointly inaugurate two India-assisted projects.

Modi government to approve acquisition of 26 Rafale-M fighters and submarines, boosting India’s naval strength amid regional tensions.

The Narendra Modi government is all set to greenlight the acquisition of 26 Rafale-Maritime strike fighters this month, continuing the trend of increased capital spending on defence equipment. In 2024-25, the NDA government spent in excess of ₹2 lakh crore on this.

HT learns that the $7.6 billion fighter jet deal is all set to go before the Cabinet Committee on Security (CCS) later this month and will be followed by government approval for three additional diesel electric submarines after all the stakeholders are brought on the same page. The Rafale-M fighters will be used to give more teeth to the Indian Navy at sea onboard India’s two aircraft carriers, while the additional submarines will strengthen conventional deterrence in the Indian Ocean Region (IOR).

The defence ministry signed 193 contracts in 2024-2025 with an outlay of ₹209059.85 crore as compared to 192 contracts worth ₹104855.92 crore in 2023-2024. Since the Narendra Modi government took office in 2014, the ministry has signed 1096 contracts worth nearly ₹10 ( ₹946225.48) lakh crore.

The numbers showed that that capital expenditure touched a peak in 2024-2025 with no surrender of any funds as compared to the previous four years. In 2020-2021, the ministry surrendered funds of ₹205 crore, in 2021-2022, ₹863 and in 2022-2023, ₹7055.99 crore. Even in 2023-24, the ministry surrendered ₹2971.97 crore. Simply put, while the Modi government was allocating significant funds for capital outlay, the defence ministry could not spend the amount, leading to lower revised estimates.

With India’s neighbours, particularly China upgrading border infrastructure all along the 3488 km LAC (line of actual control) and countries in the Indian sub-continent showing signs of serious political and financial stress, the Modi government has decided to give top priority to military capacity building with focus on ‘Aatmanirbhar Bharat.’ It is understood that top officials have been given the task of project management and accountability for indigenous capacity building by making Defence PSUs such as HAL and BEL more answerable and timeline-conscious. DRDO has also been told firmly that the nation cannot wait for never ending testing of hardware platforms given that the global instability is going to be the norm in the near future.

Prime Minister Narendra Modi transformed the earlier “Look East” policy of 1992 into the more dynamic “Act East” policy, with an eye on the changing dynamics of the world and to make India an active stakeholder in regional affairs, the people said on condition of anonymity.

Modi has also undertaken multiple visits to key Southeast Asian countries to bolster cooperation in key areas. For instance, his three visits to Singapore between 2015 and 2024 strengthened economic and fintech collaboration, while his three trips to Indonesia between 2018 and 2023 expanded maritime security cooperation.

In 2017, Modi became the first premier to visit the Philippines in 36 years, while his trip to Brunei in 2024 was the first trip by an Indian PM, symbolising India’s growing diplomatic outreach. In keeping with the Act East policy, he invited leaders of all 10 Asean member states as chief guests for the Republic Day celebrations in 2018 to mark 25 years of the Asean-India dialogue partnership.

Over the past decade, India’s trade with Asean has nearly doubled from $71 billion in 2016-17 to more than $130 billion in 2024. India is now the grouping’s seventh largest trade partner, while ASEAN is the country’s fourth biggest trade partner.

As part of efforts to enhance economic connectivity and trade, the government has pushed infrastructure projects such as the India-Myanmar-Thailand trilateral highway and improved direct flight connectivity to several Asean countries to bolster business, tourism and cultural exchanges.

In the sphere of connectivity, the government has also pushed infrastructure projects such as the Agartala-Akhaura rail link, the first such project between the northeastern states and Bangladesh that is also aimed at encouraging trade.

The people said the strategic and defence aspect of the Act East policy has been another key area of focus, with India actively engaging in maritime security cooperation with the Philippines and Vietnam. In this context, a major milestone was the sale of BrahMos cruise missiles to the Philippines, marking India’s emergence as a supplier of major military hardware in the region. India has also signed military logistics agreements with Vietnam, expanding its presence in the Indo-Pacific security framework, they said.

The Indo-Pacific Oceans Initiative (IPOI), launched in 2019, was another major step for maritime stability and freedom of navigation in the region. India and Asean held their first joint maritime exercise in 2023, which was aimed at countering security challenges in the South China Sea and broader Indo-Pacific.

Fleming Duarte, Ambassador of Paraguay to India, visited the Bengaluru City University (BCU) on Friday.

During his visit, Mr. Duarte engaged in discussions with academic leaders, faculty members, and students, focusing on student exchange programmes, research collaborations, and joint degree programmes between Paraguayan and Indian universities including BCU.

The visit also opened avenues for interdisciplinary research in technology, renewable energy, biofuels, agribusiness, and natural medicine.

Mr. Duarte expressed optimism about the future of India-Paraguay ties, highlighting the shared opportunities in academia, technology, and sustainability. He emphasised that Paraguay is keen to welcome Indian students, researchers, and businesses to explore opportunities in higher education, agribusiness, renewable energy, and infrastructure development.

Asian markets tumble as Trump’s tariffs shake global confidence

Asian stocks slumped on Friday as the fallout from US President Donald Trump’s sweeping new tariffs triggered the sharpest Wall Street sell-off since the COVID-19 crisis. US futures and oil prices also retreated, reflecting fears of a global economic slowdown.

Japan’s Nikkei 225 dropped 2.6% to 33,818.18, while South Korea’s Kospi slipped 0.8% to 2,467.14, amid ongoing tariff talks with the US. Australia’s S&P/ASX 200 sank 1.9% to 7,713.60. Chinese markets were closed for a public holiday.

Trump’s announcement of a baseline 10% tariff on imports—with steeper rates targeting countries like China and EU members—sparked broad concern. According to UBS analysts, these tariffs could shave up to 2 percentage points off US economic growth this year and push inflation near 5%, creating a severe drag on the global economy.

UBS strategists, including Bhanu Baweja, said the measures are so extreme that it’s hard to believe they’ll be fully implemented. But Trump remains upbeat. “The markets are going to boom,” he claimed before departing for Florida, downplaying the sharp losses.

On Thursday, the S&P 500 plummeted 4.8% to 5,396.52—its worst day since the 2020 pandemic crash. The Dow Jones dropped 4% to 40,545.93, and the Nasdaq tumbled 6% to 16,550.61. Smaller companies took the biggest hit, with the Russell 2000 plunging 6.6%, now over 20% below its all-time high.

Markets were already bracing for tariffs, but Trump’s sweeping and aggressive implementation surprised even pessimists. Mary Ann Bartels of Sanctuary Wealth called it the “worst-case scenario.”

Trump’s strategy seems more ideological than tactical, with long-term ambitions of reviving domestic manufacturing. But analysts warn that if these tariffs stick, markets could fall far further.

“Markets may actually be underreacting,” said Sean Sun of Thornburg Investment Management, though he suspects this may be an opening gambit.

Investors are also betting that the Federal Reserve may respond with interest rate cuts to cushion the blow. Yields on 10-year Treasurys tumbled to 4.04% from 4.20% on rising expectations of rate relief.

But rate cuts may be limited. Lowering rates could further stoke inflation, which is already expected to rise as tariffs make goods more expensive for American households.

Despite market chaos, some economic data remains solid. Weekly jobless claims were lower than expected, and the services sector showed modest growth. Still, concerns over weakening demand and rising costs hit a broad swath of the market.

Retailer Best Buy fell 17.8% due to its global supply chain exposure. United Airlines lost 15.6%, amid travel demand fears, and Target dropped 10.9% as consumers face renewed inflation pressure.

In currency markets, the US dollar edged up to 146.05 yen from 145.93 yen, while the euro inched up to $1.1068 from $1.1052.

Five top ministers received him at the airport when he landed at 9 pm despite the rain, in a special welcome.

Among those present at the airport to welcome the prime minister were Sri Lanka’s foreign affairs minister Vijitha Herath, health and mass media minister Nalinda Jayatissa, labour minister Anil Jayantha, fisheries minister Ramalingam Chandrasekar, minister of women and child affairs Saroja Savithri Paulraj and science and technology minister Chrishantha Abeysena.

“Landed in Colombo. Grateful to the ministers and dignitaries who welcomed me at the airport. Looking forward to the programs in Sri Lanka,” Modi wrote on X.

During his visit, Modi will hold wide-ranging talks with President Anura Kumara Dissanayake on April 5.

Following the meeting, India and Sri Lanka are expected to come out with around 10 outcomes, including boosting cooperation in areas of defence, energy security and digitalisation.

The prime minister’s visit to Sri Lanka comes at a time when the island nation is showing signs of recovery from economic stress. Three years ago, the country was reeling from a massive economic crisis, and India extended financial assistance worth USD 4.5 billion.

The prime minister landed in the Sri Lankan capital after concluding his two-day trip to Bangkok, where he attended a summit of the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation).

Also Read | India, Thailand upgrade ties to strategic partnership

During his visit to Thailand, the prime minister also met Thai PM Paetongtarn Shinawatra, Bangladesh’s chief adviser Muhammad Yunus, Bhutan PM Tshering Tobgay and Nepal’s PM KP Sharma Oli.

Modi also had an audience with Thai King Maha Vajiralongkorn and Queen Suthida Bajrasudhabimalalakshana.

“We will have the opportunity to review progress made on the joint vision of ‘Fostering Partnerships for a Shared Future’ and provide further guidance to realise our shared objectives,” Modi said on Thursday in a statement before embarking on the two-nation tour.

(Inputs from PTI)