its northern and eastern part which has been at the centre of a 26-year war between the government and ethnic minority Tamil separatists.

"Since the situation is different now, we are willing to have more projects in remote areas in the north and east with the support of the Sri Lankan government and from the Tamil communities," Chong said.

China Railway Beijing Engineering Group, which is a state-run company, had won a housing project worth over $300 million in April. Under the project, 40,000 houses are proposed to be constructed in the northern district of Jaffna. China's Exim Bank was ready to sanction the debt for this project.

But the project was halted with the resident's demand for brick houses instead of the concrete structures planned by the Chinese firm. Theresidents preferred to live in their traditional dwellings.

This demand from the local community has given a chance for Indian to step into the project. A legislator from the regional Tamil National Alliance, MA Sumanthiran told Reuters that the government has initiated negotiation talks with India for the housing project.

Notably, India in the first phase of reconstruction has already built 44,000 houses in the north; additionally, it also plans to rebuild Palaly airport and Kankesanthurai harbour which were heavily damaged in the war against the LTTE.