COLOMBO, July 24 (Reuters) - A state-owned Chinese aviation company will help build an aircraft maintenance facility in Sri Lanka to save the island nation the foreign exchange it spends on repairs to Chinese-made aircraft in its air force, officials said on Thursday.
China has stepped up investments in Sri Lanka, funding airports, roads, railways and ports, in a trend that has unsettled India, traditionally the closest economic partner of the island of 21 million people.
India has already raised concern over the maintenance facility following speculation it could be built in the eastern port city of Trincomalee, which India considers a strategic location in national security terms.
A 1987 accord between the two Indian Ocean neighbours provides that respective territories -- including Trincomalee -- will not be used for activities prejudicial to each other's unity, integrity and security.
"A Chinese company called CATIC will be assisting to build the facility, but the location is not finalised," military spokesman Ruwan Wanigasuriya told Reuters, referring to China National Aero-Technology Import-Export Corporation.
Air force spokesman Gihan Seneviratne said the move aimed to save foreign exchange spent on repairs to the numerous Chinese-made aircraft in Sri Lanka's defence fleet, but he declined to comment on their number or the annual expenditure on repairs.
On Tuesday, opposition leader Ranil Wickremesinghe raised questions in partiament over the new facility, seeking details of the project.
Foreign Minister G.L. Peiris told parliament the government would select an optimum location for it, adding that Trincomalee was one of the possible sites.
"This has not become an issue between India and Sri Lanka," Peiris said, adding that his Indian counterpart Sushma Swaraj had asked for details of the project, however.
The relationship with China is more commercial than political, Sri Lankan President Mahinda Rajapaksa has said in the past, in response to Indian concerns over Chinese commercial deals.
Rajapaksa's government has come under heavy pressure from the West and human rights groups for alleged war crimes during a 26-year civil conflict between government forces and separatist Liberation Tigers of Tamil Eelam (LTTE) in the north of the island, which ended in May 2009.
India shared intelligence with Colombo late in the war, but has also asked it to seek a political solution to the conflict's root causes. (Editing by Clarence Fernandez)