India and Nepal on Friday signed a memorandum of understanding to build a strategic broad-gauge railway line between Kathmandu and the border town of Raxaul in Bihar, PTI reported.

The agreement was signed after talks between Prime Minister Narendra Modi and his Nepalese counterpart KP Oli at the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation summit, or BIMSTEC, in Kathmandu. The two leaders agreed to boost regional connectivity and bilateral ties during their meeting.

BIMSTEC is a regional group comprising India, Bangladesh, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal.

In a statement, the Indian embassy in Nepal said Konkan Railway Corporation Limited will undertake a preliminary engineering and traffic survey for the proposed railway line. The 130-km railway line will be only the second rail track in the hill nation, according to Reuters. Its construction and funding will be finalised after the Konkan Railway submits its findings.

“The Raxaul-Kathmandu rail line is expected to expand connectivity by enhancing people-to-people linkages between the two countries and promoting economic growth and development,” said the statement.

The pact comes two years after China agreed to go ahead with a strategic railway link with Nepal, passing through Tibet. A feasibility study for the 70-km railway link between Gyiron in Tibet and Kathmandu has already been conducted, reported Reuters.

Earlier on Friday, Modi tweeted, saying his meeting with Oli covered several aspects of India’s ties with Nepal. “We discussed ways to further deepen our economic, trade and cultural ties,” he said. “Enhancing connectivity between our nations was discussed as well.” He described the summit’s proceedings as productive.