This was decided in September a year ago during the visit of Nepalese Deputy Prime Minister and Foreign Minister Krishna Bahadur Mahara to Beijing.

Oli assured that "Nepal will extend full cooperation for early completion of the requisite surveys for the new rail line". India would also undertake a pilot project on organic farming and soil health monitoring for implementation in Nepal.

The Nepal-China agreements came at a time when Kathmandu-New Delhi ties started soaring after a border blockade in 2015-16.

Modi, however, also underlined the issue of inclusion while developing Nepal, keeping in mind the demands of the Madhesis.

"We want to create a model relationship", Oli said.

Oli added that Nepal was between two big neighbours - India and China - and it wanted to have a friendly, neighbourly relations with the two. He expressed the desire of the Government of Nepal to develop bilateral relations in a way so as to benefit from India's progress and prosperity for economic transformation and development. "With the objective of expanding connectivity to enhance people-to-people linkages and promote economic growth and development, the Prime Ministers of India and Nepal agreed to construct a new electrified rail line, with India's financial support, connecting the border city of Raxaul in India to Kathmandu in Nepal".

Trying to reset bilateral ties, Prime Minister Narendra Modi and his Nepalese counterpart K.P. Sharma Oli on Saturday held wide-ranging talks and agreed to step up two-way engagement in key areas of defence and security, connectivity, trade and agriculture.

In his comments, Oli mentioned about the enormous impact this additional connectivity would have on the growth of business and economy of Nepal. "We will work together to stop misuse of our open border", Modi said. The two leaders emphasized the importance of implementing the remaining three links under Phase-II of the India-Nepal cross-border rail link projects: (i) New Jalpaiguri-Kakarbhitta, (b) Nautanwa-Bhairahawa, and (c) Nepalgunj Road-Nepalgunj.

Talking about discussions on defence and security issues, Modi said India and Nepal have close and deep connection on the matters of defence and security. They are more developed and more advanced than us. "This is based on mutual respect".

While PM Oli's increasing proximity to China has been a concern for India, in a strategic move to build confidence between the leadership of the two countries, India focused on Nepal's discontent over pending projects and boosting connectivity for the land-locked nation.

"I invited prime minister Modi to pay a visit to Nepal at the earliest convenient time, I am hopeful that the visit will take place soon", he said. The two sides also discussed about expediting the post-earthquake reconstruction projects in Nepal being implemented with India support. Oli was accompanied by Minister for Foreign Affairs Pradeep Kumar Gyawali, Ministers Matrika Yadav and Raghubir Mahaseth, Political Advisor to the PM Bishnu Rimal and Foreign Affairs Ministry officials at the meeting.

Viewed as an important visit, Oli has flew in a 54-member high-level delegation to India, seeking more investment from India's public as well as private sector.