(Bloomberg) --

India and Sri Lanka’s leaders agreed to work closely on trade and investment to deal with the impact from the coronavirus pandemic.

Prime Minister Narendra Modi held a virtual meeting with his newly-elected Sri Lankan counterpart Mahinda Rajapaksa on Saturday, and both acknowledged the need for closer economic coordination and deeper integration in supply chains, Amit Narang, an Indian foreign ministry official, told reporters in New Delhi. Both sides are also working on strengthening bilateral financial cooperation, he said.

India has extended a $400 million currency swap facility to Sri Lanka to assist with economic recovery and tackle disruptions as a result of Covid-19. Both sides are discussing a bilateral currency swap, while technical talks on Sri Lanka’s request for a deferment of debt repayment are ongoing, Narang said.

The Sri Lankan prime minister’s first high-level meeting since his re-election is expected to help reset ties between the two neighbors at a time when India is seeking to counter China’s influence in its immediate neighborhood. The island nation had heavily depended on China for its infrastructure development during Rajapaksa’s previous 10-year rule as Sri Lanka’s president that ended in 2015, creating tensions with New Delhi.

Mahinda’s brother Gotabaya won Sri Lanka’s presidential election in November. Both brothers chose India as the site of their first official state visit.

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