Sri Lanka on Tuesday cancelled a deal with India to develop the East Container Terminal at Colombo port with the Adani Group as an investor, reported The Indian Express. The Mahinda Rajapaksa-led Sri Lankan government, which is facing threats of countrywide protests against port privatisation, had inked the pact with India and Japan in 2019.

After a Cabinet meeting, the Sri Lankan government decided that the East terminal of the Colombo port will be completely owned and operated by the state-run Sri Lanka Port Authority, according to Reuters. Earlier, Colombo had said that 49% of the operations at the port would be controlled by India and Japan.

After the cancellation of the deal, India said it expected Sri Lanka to honour its agreement to allow it to operate a major port terminal. In an effort to placate after the breach of agreement, Sri Lanka offered New Delhi an undertaking to develop the West Container Terminal at the same facility on a public private partnership model along with Japan.

The development came less than a month after India’s External Affairs Minister S Jaishankar visited Sri Lanka to get support for the 2019 deal. “The commitment of the Government of Sri Lanka...has been conveyed several times in the recent past, including at the leadership level,” a spokesperson for the Indian embassy in Colombo said. “Sri Lanka’s Cabinet also took a decision three months ago to implement the project with foreign investors. All sides should continue to abide by the existing understandings and commitment.”

At a meeting with port trade unions in January, Sri Lanka’s President Gotabaya Rajapaksa had said the plan was aimed at developing the ECT as an investment project. The Sri Lankan government would hold 51% ownership and the Adani Group and other stakeholders would get to control 49%.

More than 70% of business is from ships making their way to Indian coast from the Colombo port, which made the deal important for Sri Lanka as well. An ECT project was significant in India, primarily for security reasons as the China Merchants Port Holdings Company controls 85% stake in the Colombo International Container Terminal, which is close to the ECT.