Sri Lanka [Images] set up a panel Friday to assess neighboring India's plan to deepen the waterway separating the two countries, saying the project could harm marine life.

India has begun dredging the Palk Strait, where a reef known as Adam's Bridge makes the waterway too shallow for ships traveling between east and west India, forcing them to take a longer, costlier route around Sri Lanka.

But critics in Sri Lanka say that dredging the seabed may affect water currents and temperature, as well as marine life and the livelihoods of fishermen.

"Sri Lanka is indeed concerned," government spokesman Nimal Siripala de Silva told reporters after the cabinet set up a panel of experts to study the project's (Sethusamudram project) impact on marine life near Sri Lanka's coasts.

PM inaugurates Sethusamudram project

India recently began work on the Rs 2,500 crore (Rs 25 billion) project to deepen the 167-kilometer (104-mile) channel. It is expected to open to ships in 2008, reducing transit time between India's east and west coasts while cutting shipping and fuel costs.

Sri Lanka hasn't formally objected to the project and De Silva did not say what prompted the government to set up the experts' group after India had already begun work on the project originally planned more than 140 years ago.

Graphic of the project

The idea for a canal at India's southern tip originated with British colonial officials in 1860. Over the past 145 years, 14 committees, nine of which were set up by the British, examined and shelved the plan.

External link: A Sri Lankan environmental view of the project