"The steps that needed to be taken to empower the people affected by the conflict include addressing legitimate concerns about restricted and monitored movement of both the citizens of the province and those visiting them for lawful purposes," Sharma said after visiting Jaffna, the erstwhile bastion of the LTTE.
"A continued reduction of the military role in civilian life in the (northern) province was important to see legitimate concerns of Tamils being addressed," he added.
Sharma, who is on a five-day official visit to Lanka, also criticised Sri Lankan Commissioner of Elections for lacking independence.
The Commonwealth was looking forward to deploy a team ofpoll observers in Lanka's presidential elections expected to be announced soon, he said.
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Earlier on Monday, Sharma met Sri Lankan President Mahinda Rajapaksa and discussed the reforms and objectives agreed upon at the Commonwealth Heads of Government Meeting (CHOGM) 2013 that took place in Colombo last November. Rajapaksa is the current chair of the 54-nation body.
The LTTE was defeated in 2009 following the death of its chief Velupillai Prabhakaran.
The last phase of the civil war in 2009 has led to widespread accusations of human rights violations by both the army and the LTTE militants, leading to a UN investigation into alleged war crimes.