China and Sri Lanka have agreed to replace a controversial agreement for the construction of a new port city in Sri Lanka's capital Colombo.

On Friday, both countries signed a modified version of the 2014 deal with new terms and conditions. The new agreement, signed between China Harbour Engineering Company (CHEC) and Sri Lanka's Ministries of Megapolis and Western Development, will not give any freehold land to the Chinese company.

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Under the new deal, the Sri Lankan government will grant land to the company for a lease period of over 99 years. The previous agreement, signed during the tenure of former President Mahinda Rajapaksa, had a provision granting freehold land to the company. The modified deal also re-named the entire project from Colombo Port City to Colombo International Financial City.

"The positive changes made to the original agreement of the Colombo Port City which was signed in 2014 was a reflection of CHECs willingness at all times to work closely with the Sri Lankan government to ensure that the project has mutual long-term benefits to the investor and the country," CHEC's chief Tang Qiad Liang said in Colombo, Xinhua reported.

A Sri Lankan government spokesperson admitted there was intense pressure from India for changes to the 2014 deal.

"India had a big concern about giving freehold land to China near the Colombo harbor. We have amended the agreement," spokesperson Rajitha Senaratne said. "There will be no freehold land but it will be on a 99-year lease." 

Tagschina, Sri Lanka, India, Colombo, Colombo Port