India and Nepal on Friday decided to expand their economic ties even as visiting Prime Minister Baburam Bhattarai sought Indian support for the ongoing political reconciliation process in his country.
Three agreements were signed after the discussions between PM Manmohan Singh and Bhattarai, but a joint statement is awaited.
The bilateral investment promotion and protection agreement signed on Friday seeks to promote and protect investments in both countries and principles of most Favoured Nation Treatment and National Treatment (NT) have been asserted in the agreement.
This means that the "investment shall be provided treatment which shall not be less favourable than that provided by the country to investments of its own investors or investors from any other country", explained a fact-sheet on the agreements from the external affairs ministry.
The pact comes in the wake of attacks on Indian joint venture companies. Earlier addressing the industry bodies, Bhattarai promised to provide security for foreign investors coming to his country. "Indian companies will not face attacks or labour problems in the future," he said.
A $250 million Credit Line Agreement was also signed. The credit line will be used to finance infrastructure projects such as highways, airports, bridges, irrigation, roads, railways and hydropower projects.
Earlier, Bhattarai had urged Indian industry to invest in his country especially in infrastructure projects like power, roads and irrigation.
"We are in the process of setting up a Board of Investments to help potential investors in smoothly executing the projects," he said, while addressing a joint business meeting organised by the industry bodies.