India and Sri Lanka enjoy a close yet complex relationship. Disparities in their size and power have historically influenced their policies and interests. However, over the last decade, the nature of their bilateral relationship has become increasingly accommodative and understanding, despite Sri Lanka’s increasing closeness with China, inability to implement the 13th amendment, and frequent overstepping of Indian redlines. Besides, New Delhi has also increased its investments, projects, and assistance, and avoided intervention in Sri Lanka’s domestic politics. India’s policy choices towards its neighbour belies simple balance of power calculations. Traditional theories of International Relations (IR) have often overlooked the role of small states in an asymmetric relationship, and emphasise on how smaller powers depend on major powers to further their interests. This paper examines how structural and domestic factors have strengthened Sri Lanka’s diplomatic power base, and impacted India’s security, strategy, status calculations. Thus, increasing the former’s geopolitical significance, agency, and bargaining leverage vis-à-vis India. Through this lens, the paper contributes to a more nuanced understanding of how smaller states like Sri Lanka have influenced foreign policy of bigger powers’ like India, that too from a position of relative strength.