PM Modi has also promised to develop inland waterways which will give sea access to landlocked Nepal. India also promised to help Nepal in agriculture through organic farming
Nepal Prime Minister Khadga Prasad Oli is on a three-day visit to India.
India and Nepal: Foundation laid for new relations
Let's work towards strengthening each other, says Nepal PM
"We need support and cooperation of friends. Our future lies in the expansion of economic engagement and bilateral trade. We have no intention to reverse the trends. Rest assured, we cannot go against the global trends," said Khadga Prasad Oli in a statement.
Communist Oli says he is committed to a liberal economy
When Oli took the Prime Minister's office, the biggest concern was that he might lean to China since he belonged to the communist party.
However, on this trip, Oli made it clear he encourages liberal economy.
As he urged business leaders to invest in Nepal, he said, "We have enacted laws and policies on foreign investment, public-private partnerships, industrial enterprises, banking and intellectual property."
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India and Nepal: Looking at trade relations between neighbors
India is a major importer of Nepalese jute products, vegetables, fruits, fruit juices, processed food and cardamom. Similarly, India imports petroleum products, motor vehicles and parts, rice, medicine and coal to Nepal.
In 2015-16, two-way trade between them amounted to $4.8 billion.
About 40% of the foreign direct investment, including tourism, manufacturing, banking, insurance, in Nepal comes from its much stronger neighbor India.