The Sri Lankan government has blocked the sale of land to China in the Colombo Port City project, as it agreed a new set of terms with Beijing on Friday.
The new agreement will see an expansion of the project, which was initially worth over $1.4 billion. A district is set to be built within the port city which will be renamed the Colombo International Financial City.
Sri Lankan government spokesperon Rajitha Senaratne claimed that objections from New Delhi led to an amendment in the contract terms, telling reporters "India had a big concern about giving freehold land to China near the Colombo harbour".
"We have amended the agreement," he said. "There will be no freehold land but it will be on a 99-year lease."
Delays over the implementation of the agreement led to the state-owned China Construction Communication Company (CCCC) demanding over $143 million in compensation from Sri Lanka, claiming that it had lost over $380,000 per day.
However the company has now dropped that claim after being compensated with increased areas of land being added to the project.