India, Bhutan to set up rail link

The pacts were signed after talks between Bhutan's King Jigme Singye Wangchuck and Indian Prime Minister Manmohan Singh.

The king, who is on a six-day visit to India, will be chief guest at India's annual Republic Day parade today.

"As part of our overall strategy of upgrading ... connectivity with Bhutan, we will conduct feasibility studies for the extension of the Indian railway network from West Bengal and Assam to the nearest border towns in Bhutan," said a statement.

The network is aimed at boosting trade and the economic development of the landlocked Buddhist nation of 734,000 people nestled between India and China.

Both sides also agreed to focus on joint power projects.

India agreed to strengthen agriculture marketing systems in Bhutan and to train farmers.