In what can be seen as a series of steps to mend their ties, India and Nepal on Saturday agreed to boost trade and economic links, connectivity via air, land and water, people-to-people ties, and mutual trust.

A joint statement, issued a day after Indian Prime Modi and his Nepali counterpart K.P. Sharma Oli held extensive bilateral discussions here, said the two leaders agreed to maintain the momentum generated by Oli’s visit to India in April, his first foreign visit after assuming office in February, by taking effective measures for the implementation of all the agreements and understandings reached in the past.

“They also agreed that effective implementation of the bilateral initiatives in agriculture, railway linkages and inland waterways development, as agreed upon by the two sides during the recent visit of Prime Minister Oli to India, would have transformational impact in these areas,” it stated.

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“While reviewing the close and multifaceted relations between the two countries at different levels, the two Prime Ministers reiterated their resolve to work together to take bilateral relations to newer heights by strengthening ongoing cooperation in diverse spheres as well as expanding partnership for socio-economic development on the basis of the principles of equality, mutual trust, respect and mutual benefit.”

According to the statement, both leaders “emphasised the need for regular convening of bilateral mechanisms, including Nepal-India Joint Commission at Foreign/External Affairs Ministers-level, to review the overall state of bilateral relations, and for the expeditious implementation of the economic and development cooperation projects”.

“The two Prime Ministers underscored the importance of trade and economic ties between India and Nepal,” it said.

Oli, while expressing concern over Nepal’s growing trade deficit with India, stated that measures to address this deficit need to be taken.

“In this context, the two Prime Ministers welcomed the outcome of the recently held Inter-Governmental Committee meeting on Trade, Transit and Cooperation to control unauthorised trade to jointly initiate a comprehensive review of the bilateral Treaty of Trade, and to consider amendments to the Treaty of Transit and related agreements with a view to further facilitating Nepal’s access to the Indian market, enhancing overall bilateral trade, and facilitating Nepal’s transit trade,” the statement said.

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Both leaders also “underlined the catalytic role of connectivity in stimulating economic growth and promoting movement of people”.

“They agreed to take further steps to enhance the economic and physical connectivity by air, land, and water,” the statement said.

“Recognising the vibrant people to people contacts and friendly bilateral ties, the two Prime Ministers directed the respective officials to expand cooperation in civil aviation sector, including early technical discussion on additional air entry routes to Nepal by respective technical teams.”

Both leaders also reiterated the importance of advancing cooperation in water resources for mutual benefit in areas such as river training works, inundation and flood management, irrigation, and to enhance pace of implementation of ongoing bilateral projects.

“They also expressed satisfaction over constitution of the joint team, which will visit areas affected by inundation and floods and consider appropriate measures for sustainable solution,” the statement said.

The joint statement assumes significance given that there was a chill in India-Nepal ties during Oli’s earlier stint as Prime Minister between October 2015 and August 2016 when a border blockade blamed on New Delhi crippled Nepal’s economy.

There were also perceptions that Oli was leaning towards China than India.

Apart from offering prayers at temples in Nepal during the course of his two-day visit that started on Friday, Modi inaugurated the Janakpur-Ayodhya bus service, a 900 MW hydropower project and announced Rs 100-crore aid to develop Janakpur city.

Apart from Oli, the Indian leaders also held discussions with Nepal President Bidhya Devi Bhandari and other government officials to better bilateral ties after which he said: “All misunderstandings with Nepal are over.”