With this, the total amount of its assistance for the development of the sector in the island nation has gone up to $1,284 million.

The railway sector in Sri Lanka is to receive a fillip with the Cabinet approving on Wednesday a $318-million line of credit from the Indian government for the procurement of rolling stock and upgrading two important railway lines in the country.

With this, the total amount of assistance from India for the development of the sector in Sri Lanka has gone up to $1,284 million.

Covering 120 km

As part of the rolling stock, six diesel multiple units with air-conditioned passenger compartments: 160 passenger coaches; 30 oil tank wagons; 10 locomotives and 20 container carrier wagons will be purchased. Totaling around 120 km, the two lines -- Anuradhapura to Omanthai and Anuradhapura to Maho -- will witness the rehabilitation of railway tracks and upgrading of signalling system. Apart from reducing the travelling time, this is expected to stimulate economic activity by ensuring efficient movement of passengers and goods between northern parts and southern parts of the country.

Carrying an interest rate of 1.75 per cent, the line of credit will have a repayment period of 20 years. The important condition attached to it is that 75 per cent of the goods and services should be sourced from India, according to an official document.

Agreement to be inked soon

When Indian Prime Minister Narendra Modi was here in March 2015, he made an announcement regarding the line of credit, which would be provided through Export-Import Bank of India. An agreement to this effect is expected to be signed soon.