Hambantota is district in southern srilanka ,which was very underdeveloped. After 2007china showed huge interest in it and in 2009 Srilanka president Mahendra Rajapaksha announced to take loan at any rate of interest for it's development like construction of road , Airport called Matala Rajapaksha international airport and naval port called Hambantota port. Nobody has taken Srilanka seriously except China,who had given $307 million loan via it's EXIM bank .
Rajapaksha took loans of billions of dollars and taken huge funds for election campaigns, the NYT reported quoting wikileaks . Finally Rajapaksha losts and the RANBOW govt won in 2015 elections which is pro indian rather than previous govt.
Mattala International airport prooved to be a big failure and ranked world's emptiest port. Columbo port was sufficient to land ships but they constructed Hambantota which docked only 2 dozen ships for 2 years.
Loan and interests were increasing so Srilanka has decided to give Hambantota port on Lease to China for 99 years by which Srilanka got approx 1 billion $ to pay off their loans.
Reason why this happened is two folded-
- Poor connectivity of Hambantota with rest of the world.
- Long term strategy of China to get acres of land. Japan times quoted " China involvement in Srilanka raised inevitable speculation that Hambantota is the latest jewel in a so called "String of Pearls" that will pave the way for China's rapidly expanding navy to operate routinely in Indian Ocean from secure bases in the region ".
Now Srilanka has shifted it's Naval unit to Hambantota. Srilanka has announced India to be the majority partner to operate loss making Mattala Rajapaksha International Airport in Hambantota.
This shows strategic importance for India by which China can't deploy Naval and Military base in Hambantota and cause harm to dominance of India in Indian Ocean.