Indian Prime Minister Narendra Modi waves after arriving at the Hazrat Shahjalal International Airport in Dhaka, on June 6, 2015
Dhaka (AFP) - Bangladesh and India on Saturday sealed a historic land pact to swap territories, which will finally allow tens of thousands of people living in border enclaves to choose their nationality after decades of stateless limbo.
Foreign secretaries of the two nations signed a protocol and exchanged instruments of ratification to make operational the Land Boundary Agreement (LBA) in the presence of visiting Indian Prime Minister Narendra Modi and Bangladeshi premier Sheikh Hasina.
The two leaders watched as officials of the two nations signed a raft of agreements and India announced a "US$2 billion line of credit" to Bangladesh in an effort to deepen bilateral ties.
Modi's first trip to Dhaka since his election win last May has been dominated by the deal to fix permanently the contours of a border which stretches some 4,000 kilometres (2,500 miles) along India's eastern flank.
While Delhi's relations with China and Pakistan continue to be dogged by border disputes, the LBA's ratification removes a thorn that has troubled relations between the two countries since Bangladesh's 1971 war of secession from Pakistan.
India's intervention on behalf of the independence fighters proved decisive in that conflict and successive Bangladeshi governments have enjoyed close ties with their giant neighbour.
But an agreement on the ownership of 162 enclaves -- essentially islands of land resulting from ownership arrangements made centuries ago by local princes -- had proved elusive in the decades since.
Bangladesh actually endorsed the deal in 1974 but it was only last month that India's parliament gave its approval, teeing up Saturday's joint ratification ceremony between Modi and his counterpart Sheikh Hasina.
Under the agreement, the countries will exchange territories, with 111 enclaves being transferred to Bangladesh and 51 to India.
People living in the enclaves will be allowed to choose to live in India or Bangladesh, with the option of being granted citizenship in the newly designated territories, and the enclaves would effectively cease to exist.
Around 50,000 people who are thought to live in the landlocked islands lack many basic services such as schools, clinics or utility services because they are cut off from their national governments.
- 'Historic moment' -
Modi, who was received by Hasina at the airport, has compared the agreement to the dismantling of the Berlin Wall.
"We've resolved a question that has lingered since independence. Our two nations have a settled boundary. It will make our borders more secure and people's lives more stable," Modi said after the signing of the deals.
Bangladesh Prime Minister has been similarly effusive, terming Modi's visit a "historic moment".
She said she was "extremely happy" that with the land pact "a 68-year old humanitarian issue comes to a peaceful end".
The two leaders also inaugurated bus services connecting the Bangladeshi capital with four eastern India cities, and Dhaka declared a special economic zone near a southern port exclusively for Indian investors.
Wary of China's growing interest in India's backyard, Modi has been keen to play a greater leadership role in South Asia since coming to power.
Just an hour after Modi's arrival, top Indian conglomerates Reliance Power and Adani signed outline agreements with Bangladesh's state-run electricity agency to invest some $5 billion in the country's rickety power sector.
"Top officials of Bangladesh's Power Development Board (PDB) and those from Reliance Power and Adani signed the deals in Dhaka to generate 4,600 megawatts of electricity," PDB spokesman Saiful Hasan told AFP.
But there was no breakthrough in a dispute about the sharing of water from the Teesta river which flows through both nations.
Modi, however, sounded optimistic about a deal.
"We have shown political resolve and mutual goodwill with the Land Boundary Agreement. I am confident that with the support of state governments in India, we can reach a fair solution on Teesta and Feni Rivers," he said.
Modi's talks with Bangladesh opposition leader Khaleda Zia on Sunday will also be closely watched by observers, with her long-running calls for fresh elections having gained little traction.
Indian officials have played down the idea of Modi playing a mediation role in the dispute between Hasina and Zia, although he might press on Zia to ensure an end to anti-government attacks.
Scores of people have been killed in firebomb attacks on vehicles since Zia called a transport blockade at the start of the year in a bid to topple Hasina.
India held off from criticising Hasina's re-election in January 2014 in a contest that was boycotted by the opposition and dismissed as "not credible" by Western nations.