NEW DELHI : Prime Minister Narendra Modi on Friday offered a credit line of $400 million for infrastructure projects and $50 million for counter terror measures to Sri Lanka during a visit by its new President Gotabaya Rajapaksa.

After bilateral talks, Rajapaksa announced the release of Indian fishermen’s boats held by Sri Lanka. New Delhi and Colombo also agreed to work closely on matters related to the economy and security amid what is being seen as rising competition between China and the US for influence in the Indian Ocean region.

Modi said development and peace in the two countries are closely linked and assured Rajapaksa that India was committed to Sri Lanka’s development and security. “India’s cooperation is always with Sri Lanka. A stable, safe and prosperous Sri Lanka is in the interest not only of India, but also of the entire Indian ocean region…India is Sri Lanka’s closest neighbour and a trusted partner... I have offered India’s commitment to Sri Lanka’s development," Modi said at a joint press conference.

Rajapaksa said at the briefing: “We discussed at length the fishermen’s issue. We will take steps to release the boats belonging to India, in our custody."

Security has become even more important in bilateral ties after a series of bombings in luxury hotels and churches by suspected terrorists that killed over 250 people in the island nation in April. Modi also offered cooperation in developing the eastern and northern parts of Sri Lanka that are home to large populations of minority Tamils.

Modi said the Sri Lankan President shared with him his vision of ethnic harmony. “I am fully confident that the Sri Lanka government will further the process of reconciliation to meet the aspirations of the Tamil people regarding equality, justice, peace and dignity. This also includes the 13th amendment to the (Sri Lanka’s) Constitution. India will be a trusted partner in developing the northern and eastern parts of Sri Lanka," Modi said.

The Constitutional amendment provides for greater regional autonomy.

The $400 million credit line offered by New Delhi will go mainly to infrastructure projects. “I trust this will benefit Sri Lanka’s economy. Also, it will give momentum to projects of mutual benefit," Modi said. Speeding up utilization of an earlier $100 million credit line was also agreed upon.

Rajapaksa, who is on a three-day visit to India, started off his engagement with Indian leaders earlier in the day with “very high expectations" on matters of security and economy. The president told reporters in a brief comment after receiving a ceremonial welcome that he would like to further two nations’ historical ties for the benefit of the people of both the countries.

“My expectations are very high and I want to, during my tenure as the president, bring relationship between India and Sri Lanka into a high level. We, of course, have a longstanding friendship, historically, culturally and politically. At the same time, we need to work together for the benefit of India and the people of Sri Lanka on security as well as economic development," Rajapaksa said prior to talks on Friday.

“During my discussions, I want to ensure that we are together for the benefit of our people," Rajapaksa said.

The Sri Lankan president, who reached here on Thursday evening, also thanked Prime Minister Modi for his invitation.

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