Last October, Sri Lanka and India had announced the finalisation of $512 million joint venture coal-powered electricity plant in Sampur in the eastern port district of Trincomalee.
A statement from the President's office said that Rajapaksa had directed the attorney general and the Secretary to the ministry of power and energy to expedite the project.
The joint venture will see the construction of two power generators of 250 megawatts each.
At the signing of the deal last October in the presence of then external affairs minister Salman Khurshid, it was announced that the construction was to begin within a year and the plant was to be connected to the national grid by 2018, providing cheaper electricity.
Sri Lanka currently depends on expensive diesel-powered plants to meet its demand that cannot be fulfilled by hydroelectricity.
The joint venture had been dragging since 2005 due to "various issues", officials said.
Sri Lanka appears keen to strengthen its relations with the BJP-led NDA government after a spell of soured relations with the previous Congress-led UPA.
The UPA had backed the previous US-moved UN human rights resolutions against Sri Lanka.
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Sri Lankan President Mahinda Rajapaksa orders quickening of India power plant project
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