NEW DELHI (AFP) — India and Nepal said on Tuesday they would review a decades-old pact governing bilateral relations that has been a source of friction between the South Asian neighbours.
Known as the 1950 Indo-Nepal treaty, it binds the two countries in a close strategic partnership and forms the basis of security and trade links, allowing landlocked Nepal access to Indian ports for commerce.
"We've had discussions with Nepal in the past about the treaty," Indian foreign secretary Shiv Shankar Menon told reporters in New Delhi on the second day of Nepal's Maoist Prime Minister Prachanda's visit to India.
"It's always been our position that the treaty should really reflect the nature of our relationship," he said.
"Both Nepal and India have changed and so has the nature of the relationship over time... so it's necessary for us how we can look at the treaty and update it. Our general approach is how we can build on and improve on what we have."
Nepal has witnessed momentous change in the past few years with the 2006 peace deal which ended a decade-long Maoist insurgency and the country's transition this year from a monarchy to a democratic republic.
"Times have changed -- we have to revise and update the treaty," Nepal's foreign minister Upendra Yadav separately told reporters in the Indian capital.
Prachanda, who led the Maoist insurgency before embracing multi-party democracy, has described the pact as "unequal" and said he would like to see it renegotiated.
Menon said both sides would together "review the treaty."
Prachanda, who is on his first visit to India as prime minister, held talks with counterpart Manmohan Singh on Monday.
During the talks, Singh said New Delhi would give Nepal 200 million Indian rupees (four million dollars) as flood relief assistance.
Large parts of Nepal and India's adjoining Bihar state have been submerged after the river Kosi which originates in the Himalayan state broke through its embankments.
Both sides also decided to set up a panel to review water resources management, including flood relief, Menon said.
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