Prime Minister Narendra Modi arrives at Kathmandu Airport
India and Nepal may finalise the Pancheshwar Multipurpose Project, a bi-national hydropower project, during Prime Minister Narendra Modi's ongoing visit to India, said sources.
The project falls under the integrated treaty on Mahakali River, bordering both Nepal and India, which was signed in 1996. It could not be developed earlier as the two countries could not decide on the terms of reference.
These have finally been agreed on, said sources, adding that the stalled project may finally become a reality.
India is also likely to announce a line of credit for Nepal, they said.
During his visit, Mr Modi will hold talks with his counterpart Sushil Koirala and meet other political leaders. He will also have the rare honour of addressing Nepal's Constituent Assembly.
Prime Minister Modi is being accompanied by National Security Advisor Ajit K Doval and Foreign Secretary Sujatha Singh.
Ahead of his visit, Mr Modi had said that he looks forward to working with the Nepalese leadership to forge a "new relationship" by identifying steps to strengthen bilateral cooperation in key sectors, including trade and investment, hydropower, agriculture and agro-processing, environment, tourism, education, culture and sports.
"I hope my visit will open a new chapter in India-Nepal relations, characterised by more frequent political engagement and closer cooperation across the full spectrum of our extraordinarily broad-based relations, which will serve as a model and catalyst for South Asian partnership for prosperity," Mr Modi had said.
Describing Nepal as a close friend and neighbour, he had said, "We have had the privilege of being a leading partner in Nepal's socio-economic development. We are committed to continue our support to Nepal in its development efforts."
Referring to the recent meeting of the India-Nepal Joint Commission after a long gap of 23 years, Mr Modi said it reviewed the entire gamut of bilateral relations and cooperation with a focus on economic relations, trade and connectivity.
In 1997, then Prime Minister I K Gujral had visited Nepal. The last Indian Prime Minister to visit Nepal was Atal Bihari Vajpayee in 2002 for a SAARC summit.
During his stay, Mr Modi would also perform a half-an- hour special prayer at the Pashupatinath temple.