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Gokhale insisted China's growing footprint in Nepal was not discussed as the talks were focused on the bilateral relationship with some reference to regional issues, with Oli flagging the stalled Saarc process and the BBIN (Bangladesh Bhutan India Nepal) initiative for vehicular movement across the subcontinent.

Prime Minister Modi said there is a long history of India's contribution towards Nepal's development and assured Mr. Oli that it would continue in future.

After a bilateral meeting the two leaders, Modi announced that the two countries had agreed on a railway link as well as inland water connectivity - Nepal will not only be "land-linked", Modi said, but also "water-linked".

Nepal is a key neighbour of India, sharing a border of 1,850 km with five Indian states of Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand - and in the north with China.

India's main worry is that Nepal may now lean more toward China as Oli heads a government of communist parties. "We have strong relations when it comes to the aspect of defence and security and are committed towards stopping misuse of our open borders". Nepal attaches great importance to its relations with India, " he said.

The Nepal prime minister was accorded a warm ceremonial welcome at the Rashtrapati Bhavan here on. But India surrounds Nepal on three sides and provides oil and other goods to the country.

Oli arrived in New Delhi on Friday in keeping with the tradition of India being the first foreign destination of any newly sworn in Nepalese prime minister. This was decided in September previous year during the visit of Nepalese Deputy Prime Minister and Foreign Minister Krishna Bahadur Mahara to Beijing. This will help "the movement of cargo, within the framework of trade and transit arrangements, providing additional access to sea for Nepal", an Indian foreign ministry statement said.

We are confident that under his wise leadership, Nepal will chart a new course of rapid socio-economic transformation for its people, he said. We have developed our friendship according to time with a goal to eradicate poverty, improve living standards.

Kathmandu and New Delhi on Saturday inked agreements that promise connectivity to land-locked Nepal over rail and river as the neighbours sought to move away from the stumbling blockade of 2015-16 that put a spoke in the bilateral relationship. Our friendship is historical, renewed, developed and is very fruitful. Oli will then call on Vice President Venkaiah Naidu and meet External affairs minister Sushma Swaraj and home minister Rajnath Singh.

The senior government official said India would unroll the red carpet for Oli and his 53-member delegation during their three-day visit, but he would also hear about Delhi's "red lines", especially in the energy and security sectors.