Against the backdrop of China’s continuous engagement with Sri Lanka from 2005 to 2019, Indo-Sri Lanka relations have exhibited constant fluctuations featuring drastic ups and downs. As a geo-strategically located small island state, Sri Lanka has juggled its relations with China and India, the two regional giants, in the face of mounting Sino-India strategic competition in the Indian Ocean Region (IOR). This thesis poses twin questions related to the above phenomenon: How does China’s engagement with Sri Lanka affect the Indo-Sri Lanka relations, and how does Sri Lanka conduct its relations with India, the immediate neighbour and the most powerful regional actor, in the wake of China-India parallel involvement in Sri Lanka? To address these questions, the study first analyses the impact of China’s robust engagement with Sri Lanka on Indo-Sri Lanka relations. Secondly, it analyses Sri Lanka’s foreign policy toward China and India in the backdrop of their parallel involvement in Sri Lanka. In doing so, the study focuses on how Sri Lanka, as a small state in the IOR, serves as a critical site for strategic competition between the two regional powers. The findings reveal that Indo-Sri Lanka relations fluctuated considerably from 2005 to 2019 amidst the growing involvement of China in Sri Lanka as the civil war with the Tamil Tigers came to an end, and in the face of post-war reconstruction imperatives coupled with war crime allegations by the west. China’s Belt and Road Initiative (BRI) and Sri Lanka’s participation in it meant an increased Chinese presence in Sri Lanka, leading India to react by making various policy choices in relation to ethnic conflict resolution and acting as a development partner of Sri Lanka. The choices India opted for had an adverse impact on Indo-Sri Lanka ties despite Sri Lanka’s efforts to achieve a balanced foreign policy strategy. In essence, an extensive Chinese presence brought on heavy pressure from India on Sri Lanka, which, in turn, caused Indo-Sri Lanka relations to fluctuate. The thesis makes two major contributions: First, it provides a nuanced insight into the literature on foreign policy strategy by capturing the largely unobserved foreign policy behaviour dynamics of small states, apart from the contribution to strategic rivalry literature. Secondly, hedging is a double-edged sword requiring judicious balancing of relations when dealing with two competing rivals in order to extract benefits out of their competition, it shows the foreign policy community of Sri Lanka how hedging should be employed more effectively in ways that make its cooperation balanced and valuable for both China and India while reducing the cost of compromising political autonomy of either country. The study concludes that among the dynamics of Indo-Sri Lanka relations from 2005-2019, cycles of change and continuity figures prominent. While the Mahinda Rajapaksa (MR) government favoured China over India for economic and political cooperation, the Maithreepala Sirisena (NUG) government shifted to preferring India over China in these areas. It is change and continuity in Indo-Sri Lanka relations which has been the predominant trend in the two states’ bilateral relationships from 2005 to 2019. The Mahinda Rajapaksa (MR) regime (2005-2015), during its first tenure pursued a policy of active hedging between China and India whereas it deployed passive hedging between China and India during its second term. In contrast, the National Unity Government (NUG) (2015-2019) that followed the MR regime initially balanced India against China, but later it resorted to maintaining an equal distance from the two countries administration initially balanced India against China, but later it resorted to maintaining equidistance between the two.