COLOMBO, Sri Lanka — Indian Prime Minister Narendra Modi on Saturday inaugurated construction work on a solar plant in neighbouring Sri Lanka and witnessed the signing of energy and defense agreements seen as efforts to consolidate New Delhi’s influence in the debt-stricken island nation.

India has been concerned about China’s increasing presence in Sri Lanka, which is located on one of the world’s busiest shipping routes in what India considers part of its strategic backyard.

Beijing has provided Sri Lanka with billions of dollars in loans for development projects. But Sri Lanka’s economic collapse in 2022 changed the country’s priorities and provided an opportunity for India, as New Delhi stepped in with massive financial and material assistance. At the same time, China’s support for restructuring its infrastructure loans is vital for Sri Lanka.

Modi on Saturday held talks with Sri Lankan President Anura Kumara Dissanayake and the two virtually inaugurated construction work on an Indian-funded 120 megawatt solar power plant, which is being built as a joint venture between the two countries.

Sri Lanka faced a severe power shortage in 2022, after being unable to pay for oil and coal to power its electricity plants. It has also set ambitious goals of reducing its dependence on fossil fuel.

China also plans to build a $3.7 billion oil refinery near Hambantota port, which was taken over by Beijing after Sri Lanka failed to pay back the loan to develop the port. It gives China a key foothold in the country directly opposite India’s coastline.

Both India and China have separately agreed on terms with Sri Lanka for restructuring its debt, which would enable the country to come out from bankruptcy and rebuild the tattered economy.