India's new Foreign Minister, Yashwant Sinha, has arrived in Sri Lanka on a two-day visit aimed at strengthening bilateral relations between the two nations.

He will also get an update on the peace process in the country.

Mr Sinha is meeting Prime Minister Ranil Wickramasinghe on Thursday before talks with President Chandrika Kumaratunga on Friday.

Yashwant Sinha: His first trip abroad

This is his first trip abroad as the Indian foreign minister.

Indian officials say the purpose of the visit is to enhance "good neighbourliness", and to boost economic ties.

But they say there is no possibility of Indian mediation in the peace talks between the Sri Lankan Government and the Tamil Tigers - only that India supported the current ceasefire as a good friend and partner of the country.

Focus on trade

Mr Sinha has only been in his job as India's foreign minister for a week - he was appointed following a cabinet reshuffle.

The main aim of his brief visit will be to continue the trade negotiations initiated two months ago when the Ceylon Petroleum Corporation handed over the oil tank farms in the eastern sea-port of Trincomalee on a long-term lease to the Indian Oil Company.

Taxes on garment exports will be reduced

This has been of considerable Indian interest for decades and, in return, Delhi has offered a concessionary loan of $30m to Sri Lanka.

Last week, trade relations between the two countries were further boosted with the Sri Lankan Government's decision to establish an exclusive export processing zone - also in Trincomalee - to encourage Indian investors and exporters to come to Sri Lanka.

The zone is expected to be established within the next six months.

As a result, India has promised to provide greater access to more Indian ports for Sri Lankan exports, and has reduced tax for garments made here.

Closer relations

The Sri Lankan Government has also announced that this major Indian presence in the east of the island will result in a tightening of security there.

The east is where the current ceasefire seems at its most fragile, and where intercommunal violence has erupted in the last fortnight.

Yashwant Sinha's arrival on the island comes a month after Sri Lankan Prime Minister Ranil Wickramasinghe's visit to India.

These new trade links are part of the peace dividend for Sri Lanka's troubled economy, and the two governments are keen to consolidate the relationship as a catalyst to growth and development in the region.