India, July 23 -- The IMF's decision to crack the whip on tax breaks granted by the Sri Lankan government to the Port City Colombo project is a welcome move because such non-transparent measures have largely benefited Chinese State-run firms implementing such ventures. It is also significant that IMF has nudged Sri Lanka to amend certain investment-related laws to make them more rules-based and aligned with international best practices. It should be noted that the China Harbour Engineering Company (CHEC), which is building the $1.4-billion Port City Colombo, was involved in the unsustainable development of the strategic Hambantota port, which Sri Lanka was forced to hand over to China on a 99-year lease after struggling to repay its debts to Chinese firms. Most of the projects under China's Belt and Road Initiative (BRI) in India's neighbourhood have come with crippling debt traps. India-Sri Lanka relations underwent a dramatic transformation during PM Narendra Modi's visit in April, when the two sides signed a defence cooperation agreement and roped in the UAE to develop the Trincomalee oil tank farm into an energy hub. These developments were aimed at countering what India perceived as growing Chinese security and economic presence in its backyard. India should now be prepared to expand its economic presence in Sri Lanka, where an Indian firm is engaged in developing a container terminal at Colombo port. New Delhi may not be able to match Beijing's unfettered largesse, but it has repeatedly shown that its assistance for neighbours comes without any unnecessary conditions and is largely driven by local needs. Stronger economic and energy integration between India and Sri Lanka will be a potent counter to China's efforts to encircle India by increasing its influence across the neighbourhood....