NEW DELHI, Nov 6: India and Sri Lanka on Saturday resolved to sign a bilateral defence cooperation agreement and a memorandum of understanding on rehabilitation of an airfield in Jaffna.

A joint statement issued after talks between Sri Lankan President Chandrika Bandaranaike Kumaratunga and Indian Prime Minister Manmohan Singh said the Indian side also agreed to carry out the refit of the Sri Lankan naval ship 'Sayura' and underwrite the costs.

The two leaders agreed that a $100 million credit line offered by India for the development of rural infrastructure would also include refurbishing of the road between Anuradhapura and Trincom-alee, which is to be named the Rajiv Gandhi Amity Highway.

"India, for its part, reiterated its support for the process of seeking a comprehensive, negotiated settlement acceptable to all communities of Sri Lanka, and reflecting the pluralistic nature of Sri Lankan society, within the framework of a united Sri Lanka and consistent with democracy and respect for individual rights," the statement said.

India favours the early resumption of negotiations pertaining to the peace process.

"Any interim arrangement on administration should be an integral part of an enduring final settlement that maintains the unity and territorial integrity of Sri Lanka and ensures the safety, well-being and prosperity of the people," the joint statement said.-JN