External Affairs Minister Sushma Swaraj shakes hands with Nepal's Prime Minister Sushil Koirala at a meeting in Kathmandu, Nepal on Saturday.
India and Nepal today agreed to "review" and adjust" the Treaty of Peace and Friendship of 1950 to reflect the current realties.
The decision was taken at the meeting of the Indo-Nepal Joint Commission co-chaired by External Affairs Minister Sushma Swaraj and her Nepalese counterpart Mahendra Bahadur Pandey. The meeting took place after a gap of 23 years.
The JC also directed Nepal-India Boundary Working Group to commence field works at the earliest.
Late evening, the two sides issued a joint statement which said the meeting reviewed the entire gamut of Nepal-India relations and affirmed that the Joint Commission would make an important contribution to strengthen the traditionally warm and close relations between the two countries.
The Joint Commission was formed in 1987 at the Foreign Ministers' level with a view to strengthen understanding and promote cooperation between the two countries.
According to the joint statement, Nepal reiterated its support for India's candidature for permanent membership of the UN Security Council.
"The Joint Commission reiterated the need for reviewing, adjusting and updating the Treaty of Peace and Friendship 1950, reflecting the current realities. It directed the Foreign Secretaries to make necessary recommendations.
"The Joint Commission also directed the Nepal-India Boundary Working Group to commence field works at the earliest," the statement said.
The two ministers noted Nepal's trade deficit with India and agreed to take effective measures to address the problem.
Both sides stressed the need to complete necessary formalities to implement the Bilateral Investment Protection and Promotion Agreement (BIPPA).
In order to promote Nepal's exports, India agreed to relax certain norms including simplifying and streamlining transit and custom procedures and lifting certain restrictions on the export of Nepalese products to India.
"The authorities concerned have been instructed to carry out the works of the Terai Roads under Phase I projects with utmost priority and commence the Phase II projects by concluding agreement as soon as possible.
"It also underlined the need for expediting the construction work of the cross-border railway connectivity," the statement said.
Talking about cooperation in exploiting hydropower potentials of Nepal, the statement said authorities have been asked to finalise the text of a Power Trade Agreement at the earliest.
The JC expressed satisfaction over the implementation of 400KV Dhalkebar-Muzaffarpur Double Circuit Cross-Border Transmission Interconnection and noted that the transmission interconnection would integrate the power grids on the two sides of the border and pave the way to initiate unfettered flow of power between the two countries.
The JC welcomed the signing of MoU on the installation of 2,700 shallow tube-wells in the terai region.
The Indian side agreed to arrange for necessary equipment and other assistance for an early operationalisation of the Bharat-Nepal Maitri Emergency and Trauma Centre.
The JC noted the "satisfactory progress" in projects covered under the EXIM Bank Lines of Credit (LoC).
It appreciated the ongoing bilateral cooperation in culture and tourism sectors and discussed the possibilities of extending cooperation for the development and conservation of historic sites of Pashupati, Lumbini, Janakpur and Barahachhetra.
Ms Swaraj extended an invitation to the Foreign Minister of Nepal to pay an official visit to India and he accepted it.
The Nepalese Foreign Minister also hosted a dinner in honour of Ms Swaraj.