The United National Front government last week announced that India accounts for the highest percentage of imports to Sri Lanka, but failed to highlight the startling trade imbalance between the two countries.

Currently, there is a trade balance of US $ 667.8 million in India's favour as our dominant next-door neighbour is making maximum use of various bi-lateral trade agreements, while Sri Lanka is lagging far behind, unable to keep pace with the emerging global economic power.

If it's only trade, Sri Lanka has lost it, with Indian imports to Sri Lanka standing at US $ 837 million against Sri Lanka's exports - a minimal US $ 169.2 million.

From joss sticks to printing, we have lost out to India and as a result, a large number of our small industries are threatened by the prices of Indian products, which have the advantage of cheap labour.

But then trade is not everything. The geo-political importance of India to Sri Lanka is such, that even if the gulf in the trade balance between the two countries becomes further widened - despite various promises to narrow it - not many would dare to make a big hue and cry over it.

The reason: India is the only country that can come to Sri Lanka's rescue within a couple of hours in the event of the LTTE resuming the war, without giving the two-weeks notice as stipulated by the truce agreement.

It was India that came to Sri Lanka's rescue when the LTTE attacked the Kolonnawa oil tanks, engulfing the whole area in a raging fire. Within three hours, three Indian planes landed at the Katunayake airport carrying Acquafoam.

India rushed to our defence during the 1971 JVP insurrection, with the ports and airports being manned by them. A contingent of elite Gurkhas was sent specially for this purpose.

It was also India which speedily despatched a ship carrying life-saving boats, divers, medical staff and food items when floods hit eight districts in May.

Proximity and shared roots, more than anything else, have made India an indispensable good Samaritan, always there for us in times of distress.

It is salutary that India has decided to play a greater role in ensuring the territorial integrity of Sri Lanka and a more overt role in Sri Lanka's quest for a negotiated settlement, on the invitation of the UNF government.

The UNP led governments have a track record of turning Indo-Sri Lanka ties sour. J.R. Jayewardene and R. Premadasa had their share of problematic days.

During the 20 months of the UNF government, many were wondering whether Ranil Wickremesinghe's government too was on its way to make the same blunder that J.R. Jayewardene made by wooing the West and Japan while not making adequate moves to placate India, that could turn insecure over certain developments here.

JRJ's strategies of ignoring India and concentrating on the US, Japan and Pakistan resulted in India giving weapons training to the LTTE during the Indira Gandhi regime. While J.R. ignored the warnings of his advisers, when things got really out of hand, he finally had to seek Indian assistance to tame the LTTE.

The UNF government however, with the memory of its former leaders' blunders still fresh in mind, appears to be acting cautiously.

The US, Norway and Japan-led international security net which Prime Minister Wickremesinghe was very keen on tightening, lately appears to have developed problems because of India's reluctance to be a party to it.

The UNF has realized that it could not reach a final solution that would be inimical to the interests of India. Given India's strong anti-LTTE stance, the regional power was unlikely to support any moves to hand over the North and East interim administration to the Tigers without the participation of other Tamil parties.

This is despite the keen interest by other supporting nations for the government and the LTTE to reach an agreement on the setting up of an interim administration for the two war-battered provinces.

With the LTTE continuing its killing spree and violating the ceasefire agreement with impunity, the UNF government's enthusiasm to set up an LTTE-dominated interim council had dampened in recent times.

Now that there are shared concerns by the two governments, more and more ties in the spheres of defence and economy are being clinched, with a long-term goal of countering Tiger threats.

It was in this backdrop that the Wickremesinghe government moved to revitalize the Indo-Sri Lanka Joint Commission formed during the PA regime but neglected by the UNF for some time. Foreign Minister Tyronne Fernando made the first step by inviting his counterpart in India.

Although External Affairs Minister Yashwant Sinha's visit for this purpose was cancelled at the last minute owing to a no-confidence motion against the BJP-led government, dialogue is continuing to set up fresh dates for the visit.

It is likely that the visit will be rescheduled early September as Minister Fernando will be away later this month in Peru.

Last month there were extensive discussions in Delhi during a meeting between the foreign secretaries of the two countries.

Among the areas in which co-operation between the two countries is to be expanded are trade, investment, infrastructure development, transport, civil aviation, power and energy and the service sector.

Although anomalies and impediments to the accord unfavourable to Sri Lanka were discussed, the small neighbour was likely to get squeezed further by the neighbouring giant, now a global economic power.

Already hundreds of small industries have been hit by the influx of products from India following the Indo-Lanka Trade Agreement.

But then, all these are secondary to defence. And with all the sea patrolling, tips provided on LTTE ships and other surveillance measures within Sri Lanka by the Indians, the last thing the government here would risk is to antagonize India.

Another comforting factor for Sri Lanka is the emerging ties between the US and India. Taking sides in the cold war is no more and the ever powerful Lal Krishna Advani, India's Deputy Prime Minister and the premier-in-the-making, is pro-America and a hardliner on anti-terrorism.

The developing ties are such that US Secretary of Defence, Donald Rumsfeld, in a very special gesture, came to meet Advani at his Washington hotel last June, upon hearing that the latter was about to leave for Los Angeles. (Advani was visiting the US to address the World Affairs Council held there.)

However, this does not mean that India would allow anybody to use Sri Lanka as a playing field. There's no way that India would tolerate Yasushi Akashi presenting a gift to Velupillai Prabhakaran, the man who hatched the plot to kill Rajiv Gandhi. Yet, it is fairly satisfied by the stand taken by the US against the LTTE.

Last week's meeting between High Commissioner Nirupem Sen and the SLMC leadership is a significant one.

Unlike Congress (I), the nationalist BJP-led government is known for its strong stand against Islamic extremism. With Pakistan on one hand and extremist groups raising their heads in Bangladesh, the last thing India wants is the raising of Islamic fundamentalism or militarism in Sri Lanka, locking India from East, West and South and aggravating the security threats to the Centre.

Hence the need to cater to the needs of, and listen to the grievances of the moderate Muslim party, the SLMC, fortunately the principal Muslim party here.

India, and even other countries, are aware of the fact that one of the aims of the LTTE in adopting repressive moves towards the Muslims is to push the community towards extremism and militarism. Given a chance to choose between LTTE terrorism and Islamic militarism, despite the barbarism of the former, the nations supporting Sri Lanka's peace process would adopt more stringent measures towards the latter.

Therefore the fear among the moderate Muslims is that the Eastern Muslims will play into the hands of the LTTE. Hence, India would very likely do its best to prevent such a scenario here. Interestingly, the recent attacks on Muslims coincided with the move by Muslim politicians to agree to a unified stand on the interim administration.

One may well remember that the LTTE's return of lands it had forcibly taken away from the Muslims came immediately after the breaking away of the Athaullah faction from the SLMC in late November, last year.

India is well informed about these developments and is closely monitoring them. Whatever reports there are of Islamic militarism raising its head here, India will promote those democratically inclined, so that they finally emerge victorious. While many would appreciate these measures, very little support has been received for the proposed bridge between Sri Lanka and India, unanimously opposed by Jayalalitha Jayaram and Velupillai Prabhakaran, fearing threats from one another, among other concerns.

However, bridge or no bridge, measures have been taken by the UNF to reach out to the four Southern states of India - Karnataka, Kerala, Andra Pradesh and Tamil Nadu - and the proposed visit by Prime Minister Wickremesinghe later this month to this region is likely to seal the bond. India gave Katchchativu back to us in 1975. But then thousands of Indian fishermen invade our Northern seas daily, depriving our fishermen of the bulk of their catch.

This has been a long debate, despite regular arrests of Indian fishermen.

India took 94,000 citizens of Indian origin back, the only country other than Burma from which India agreed to accept repatriated citizens. It turned down such requests from Uganda and Fiji. India also lost 1700 of its troops and a further 4,500 were wounded when its peace keeping forces were involved in a battle to crush terrorism here. It's true that some analysts termed the military operation here an act of unwarranted intrusion into a small neighbouring country, aimed at imposing Indian hegemony in South Asia.

There's a long list of pluses and minuses in Indo-Lanka relations.

It was only last week that Indian Defence Minister George Fernandes reiterated the fact that the securities of India and Sri Lanka are interlinked and that it was a unified concern. While Fernandes made these remarks to visiting Economic Reforms Minister Milinda Moragoda, the former Prime Minister of India Inder Kumar Gujral, underscored the bond between the two countries in his foreword to Moragoda's book "A warm heart, a cool head and a deep breath".

He wrote, "Few countries are as inextricably linked with each other as Sri Lanka and India. Our societies have been woven on the same cultural and religious loom; our languages and literatures, our attire and cuisine, our dance and music reflect the same texture and tones.

In modern times, our politics have added another vibrant dimension to these traditional bonds - the dimension of parliamentary democracy".