About 25 acres of the Atchchuvely Industrial Zone will be developed initially, an Indian high commission statement said.
The project aims to provide investors basic infrastructure and utilities like access roads, internal roads, water supply systems with a treatment plant, power supply, sewerage and waste disposal systems.
The project is expected to provide a boost to economic activities in the Jaffna peninsula and generate local employment, both direct and indirect, for about 2,000 people.
"It is also expected to lead to a flow of significant investments to increase production capacities in the sectors of textiles, plastic and leather products, food processing, agro-based industries, oil and fibre products."
The High Commission of India Friday signed a deal with its project implementation partner, the United Nations Office for Project Services. India is giving a grant of 1.7 million dollars.
The project will be completed in 14 months and it will help revive the economy of the north which was battered by the 30-year ethnic war which ended in May 2009.
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