An embassy official said on condition of anonymity that it is unfortunate that the government unilaterally announced that development and operation of Colombo Port's East Container Terminal will be carried out solely by Sri Lanka.
Sri Lanka had agreed to develop the strategic terminal under a deal in which India and Japan were to own 49 per cent of the terminal's shares while Sri Lanka's Ports Authority would hold 51 per cent.
Opponents of the agreement said it was a selloff of a profitable venture that should be held by the state.
On Tuesday, the government declared the East Container Terminal, which is already in operation, would be wholly owned by the Sri Lanka Ports Authority. It said it would instead develop the port's West Container Terminal with investment from India and Japan.
The Indian Embassy on Tuesday said it still expects Sri Lanka to implement the agreement the three countries reached in 2019 and was reaffirmed by a Cabinet decision three months ago.
Japan and especially India with close physical proximity to Sri Lanka have been concerned about growing Chinese influence in the island nation.
China considers Sri Lanka to be a critical link in its massive “Belt and Road” global infrastructure building initiative and has provided billions of dollars in loans for Sri Lankan projects over the past decade. The projects include a seaport, airport, port city, highways and power stations.