This is the first such deal signed by Sri Lanka with any foreign country, reflecting the new Lankan government's pro- India approach.
The pact was signed after talks between Prime Minister Narendra Modi and new Sri Lankan President Maithripala Sirisena who chose India for his maiden foreign visit after assuming charge following a bitter presidential poll.
Both the leaders also decided to expand defence and security cooperation between the two countries.
It will also facilitate cooperation in radioactive waste management and nuclear and radiological disaster mitigation and environmental protection.
More From This Section
India's ties with Sri Lanka had taken a hit during the rule of Sirisena's predecessor Mahinda Rajapaksa as China had expanded its footprint in the country by building ports, highways and participating in other infrastructure projects.
"The bilateral agreement on civil nuclear cooperation is yet another demonstration of our mutual trust. This is the first such agreement Sri Lanka has signed," Modi said in a joint press interaction with Sirisena.
"We welcomed the progress in our maritime security cooperation, including in the trilateral format with the Maldives," he said.
63-year-old Sirisena, who had dethroned Rajapaksa from his 10-year rule after a bitter presidential poll, has already indicated that he wants to have a closer relationship with India.
Modi said they had "excellent discussions" on bilateral relations and international issues.
On the fishermen issue, Modi said he and the President attached the "highest importance" to it.
"It affects livelihoods on both sides. We agreed that there must be a constructive and humanitarian approach to the issue.