Accompanied by Sri Lankan President Maithripala Sirisena, Modi also unveiled a plaque inaugurating Talaimannar 1650 Pier Railway station.
Modi flew in here by an IAF chopper from the ancient holy town of Anuradhapura where he offered prayers at the sacred Mahabodhi tree. He is on his way to Jaffna, a former war zone in the island's Tamil-majority Northern Province.
It is designed with a speed potential of 120 km per hour.
The completion of the rail projects in the northern region is a big step towards providing safe, time and fuel efficient, comfortable and environment friendly transport service to the people of Sri Lanka.
Sri Lankan officials said that after commissioning of the new section, the commitment of the Government of Sri Lanka to restore rail track connectivity in the Northern Province after a lapse of 25 years has been fulfilled.