The proposed high voltage direct current link (HVDC) link would be a 200 kilometre submarine cable that could connect Madurai in Tamil Nadu and Anuradhapura in Sri Lanka's North Central province.
It is expected to cost 450 million dollars and would have a capacity of 1000 MegaWatts, the newspaper said, quoting unnamed Indian officials.
Southern India, equipped coal and nuclear generation, has surplus energy.
A joint committee has been set up with Sri Lanka power ministry and Ceylon Electricity Board (CEB) on one side and India's power ministry, the Central Electricity Authority and the Power Grid Corporation on the other.
India now has a transmission link with only Bhutan, as part of the 1,040 MW Tala hydroelectric power evacuation system, the The Hindu Business Line said.
India's Nati