India has extended a US $ 250 million line of credit to Nepal. It will be used to finance a range of infrastructure projects, including highways, airports, bridges, irrigation, roads, railways and hydropower projects.

The soft loan will carry a concessional rate of interest of 1.75 percent per annum with a 5 year moratorium. The two countries also signed a Bilateral Investment Promotion Agreement.

Kathmandu agreed to address the security concerns of Indian investors.

An MOU providing for an Indian grant for the Goitre Control Programme in Nepal was also inked. These pacts were signed after delegation level talks between the Prime Ministers of the two countries in New Delhi.

Official sources said Dr. Manmohan Singh held wide-ranging discussions with the visiting Nepalese Prime Minister Baburam Bhattarai on a host of bilateral issues, including expanding economic and security ties between the two countries.

Mr. Bhattarai updated Dr. Singh about recent political developments and sought India’s support for the peace process in his country. He also briefed New Delhi about progress in the integration and rehabilitation of the Maoist cadre in the national army.