Bangladesh and India signed two deals on Monday to boost trade and discussed ways to prevent cross-border militant attacks, officials said.
The pacts on bilateral trade and investment were signed after meetings between foreign ministers Pranab Mukherjee of India and Dipu Moni of Bangladesh.
Mukherjee, on a short visit to Dhaka, said the deals would reduce the South Asian neighbours' trade gap, which has soared to around three billion dollars in favour of India.
"I am aware of the trade imbalance. Every time we discuss, we try to explore possibilities as to how that gap can be reduced. Surely what is possible is to reduce the gap and keep it within manageable limit," Mukherjee said.
His Bangladesh counterpart said the two sides had a "comprehensive discussion" on security issues, with Dhaka pledging not to allow its soil to be used by terror groups to attack India.
Mukherjee is the highest-ranked foreign official to visit Bangladesh since Sheikh Hasina's Awami League party won a landslide victory in Bangladesh's general elections six weeks ago.
The Awami League, which led the country to independence from Pakistan after a bloody war of liberation in 1971, is seen as close to India. Indian forces fought with Bangladeshi troops against Pakistani soldiers during the war.
In recent years the ties have often been strained by border skirmishes and New Delhi's accusations that Bangladesh-based Islamic groups were behind a number of blasts across India -- though not the Mumbai attacks in November.
India also alleges that tribal and ethnic separatist groups waging insurgencies in its northeast operate from bases in Bangladesh.