The paper explores the changing bilateral commerce between India and Sri Lanka with focus on how the two countries have reacted strategically toward the economic needs and political agendas of each other. India and Sri Lanka are geographically proximate neighbours and thus have a long history of economic, cultural, and diplomatic interactions that have defined the character of the bilateral trade as well as its direction. The paper highlights the essential factors of political willingness and economic uses of flexibility in supporting a beneficial environment of trade. The study determines the potential of interdependence between the two countries in case of trade using Trade Intensity Index (TII) and analyses trade data from 2006 to 2024, to evaluate the intensity of trade between the 2 countries. The index gives a quantitative idea of the robustness of bilateral trade compared to the total trade activity of a country which will enable a broad evaluation of trends, patterns and change in the trade dynamics over the time. The results are in an effort to provide understanding as to how economic complementary relationship, policy frameworks, and regional cooperation have impacted trade flows, and to flag important sectors that have untapped potential. Finally, this paper will add insights concerning the Indian-Sri Lankan economic relationship and the essence of the strategic importance of long-term bilateral engagements in a fast-evolving global trade environment.