The Indian Prime Minister Narendra Modi congratulated Sri Lanka on its independence day and said he looked forward to welcoming President Maithripala Sirisena later this month.

"On their Independence Day, my greetings to people of Sri Lanka. The bonds of history, culture and shared values that we share are unbreakable,” the prime minister tweeted.

"My best wishes for the development of Sri Lanka in the years to come. I look forward to welcoming President Sirisena later this month."

The new Sri Lankan president, Maithripala Sirisena, marked the anniversary of the state's independence from British colonial rule with a ceremony with the Buddhist clergy and a military parade.

"The light of freedom, which remained covered under the shadow of terrorism, began to shine again after the eradication of the brutality of terrorism by the Government of President Mahinda Rajapaksa in the Year 2009. Although our sovereignty and territorial integrity was retained by this, the need to proceed further towards national unity through genuine amity and friendship among people is a task that needs achievement. Just as the land was united, it remains necessary to join all Sri Lankans with the bonds of unity."

"As we celebrate the gaining of Independence, today, we recognize our bounden duty to give all honour and respect to the members of the Security Forces who made great sacrifices to protect our sovereignty and territorial integrity in the battle against terrorism."

The US Assistant Secretary of State for South and Central Asian Affairs Nisha Biswal said a lot of work remains to be done in Sri Lanka, in a statement released at the conclusion of her visit to the island.

Ms Biswal said she heard the TNA leadership's perspective for "meaningful progress on reconciliation and political inclusion", during her meeting with the party in Jaffna.

The assistant secretary also had "productive conversations" with President Maithripala Sirisena, Prime Minister Ranil Wickremasinghe and Foreign Minister Mangala Samaraweera, expressing US willingness to work with the new government.

"Clearly, there is a lot of work to be done. The United States looks forward to partnering with the Sri Lankan people to address the challenges and help Sri Lanka realize its true potential," she said.

The surprise result of the presidential election, which saw Mahinda Rajapaksa defeated by his challenger Maithripala Sirisena, is proving to be a step back for investors, reports Bloomberg.

Sri Lanka's stock index is the world's fifth worst performer since the election last month, while the new government last week cancelled casino licenses, reduced public investment and introduced a one-off 25% tax on companies or individuals who reported more than $15mn in profits.

Australian mogul James Packer has already withdrawn from a $350mn hotel resort, with several Chinese projects also now in danger of being cancelled.

“The new government has gone beyond condemning what it sees as overpriced or immoral projects and targeted big domestic business as a whole,” Sasha Riser-Kositsky, Asia Associate at Eurasia Group, said in a Jan 30 note. The moves increase uncertainty for foreign and local companies and “will depress private investment,” he said.

"We already raised our objection against his decision to attend the Independence Day celebrations. It is unbecoming for the TNA leader to go against the traditional party position that reflects the common will of the affected Tamil people."

"It is their individual decision and the TNA has nothing to do with it."