President Anura Kumara Dissanayake welcomed Modi -- the first foreign dignitary to visit Colombo since the leftist leader swept elections last year-with a 19-gun salute.
The solar plant on the island's northeastern Trincomalee district had been stalled for years, but reinvigorated with New Delhi's backing as a joint project.
His visit comes as Colombo grapples with the competing interests of New Delhi and Beijing.
Regional allies
China has emerged as Sri Lanka's largest single bilateral creditor, accounting for more than half of its $14 billion bilateral debt at the time the island defaulted on its sovereign debt in 2022.
Colombo also signed an agreement announced in January with a Chinese state-owned company to invest $3.7 billion on an oil refinery in the island's south.
New Delhi has expressed concern over China's growing influence in Sri Lanka.
On the sidelines of the Bangkok BIMSTEC meeting -- the grouping of the seven nations on the Bay of Bengal -- Modi held a rare face-to-face meeting with Myanmar's junta chief Min Aung Hlaing.
India was the biggest benefactor of Hasina's government and her overthrow sent cross-border relations into a tailspin, culminating in Yunus choosing to make his first state visit last month to China.
Modi also met on Friday in Bangkok with his Nepali counterpart KP Sharma Oli, the first since Kathmandu's leader returned to power last year, as well as Tshering Tobgay of Bhutan.
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