India and Sri Lanka on Saturday signed a memorandum of understanding on defence cooperation after talks between Prime Minister Narendra Modi and Sri Lankan President Anura Kumara Dissanayake.

The development came amid concerns in New Delhi about China’s growing presence in Sri Lanka.

Modi arrived in Colombo on Friday for a three-day visit to Sri Lanka, and held talks with Dissanayake on Saturday.

During the talks, the Sri Lankan president said that his country’s territory would not be used “in any manner that is inimical or detrimental to India's interests”, Foreign Secretary Vikram Misri said.

Modi said he was grateful to Dissanayake “for his sensitivity towards India’s interests”.

“We believe that we have shared security interests,” the Indian prime minister said. “The security of both countries is interconnected and co-dependent.”

The two countries also signed six other memoranda of understanding – including developing the Sri Lankan city of Trincomalee as an energy hub in partnership with the United Arab Emirates and multi-sector grant assistance to the island country’s Eastern Province.

Modi said that India also decided to reduce interest rates on loans given to Sri Lanka to support the country’s external debt financing.

Sri Lanka faced an economic and political crisis in 2022 with the country declaring bankruptcy in July that year.

Modi on Saturday said he was happy “to see Sri Lanka back on the path of progress” and that he applauded the courage and patience of the people of the country.