Giving a major boost to connectivity, India and Nepal yesterday agreed to develop inland waterways between them connecting Nepal to seas and build a new rail link between the Indian city of Raxaul and Kathmandu.

The decisions were announced in a joint statement issued after a meeting between visiting Nepalese Prime Minister Khadga Prasad Sharma Oli and his Indian counterpart Narendra Modi yesterday.

The two leaders vowed to further strengthen bilateral ties in key areas of defence and security and trade.

Modi said that India will continue to support Nepal as per that country's priorities.

On his part, Oli said he has come to India to take the bilateral ties between the two countries to newer heights.

"Enhanced connectivity will definitely contribute to our desire to be a land-linked country instead of land-locked," Oli added.

The plan to develop inland waterways would give landlocked Nepal much-needed access to sea, boosting its exports.

During Oli's previous term in office in 2015, he signed a series of agreements with Beijing seeking to lessen Nepal's dependence on India.

But the prime minister -- who returned to power in February with a strong two-third majority in parliament -- will need to balance relations with both of Nepal's large neighbours if he is to make good on his ambitious plans to kickstart growth at home.

Nepal shares a 1,850-kilometre (1,150-mile) open border with India, which is also the Himalayan country's largest trading partner.