The 10-year agreement also simplifies procedures for import and export between the two neighbours, India's commerce ministry said.

Indian Trade Minister Kamal Nath and Bhutan's Minister for Trade, Industry and Power Lyonpo Yeshey Zimba inked the deal that replaces one that expired in March.

It provides for transit and four new entry and exit points for Bhutanese goods including the port cities of Mumbai in the west and Chennai in the south, on top of 12 existing entry points.

Two hydro-electric power deals were also signed, with energy-starved India pledging to import a minimum of 5,000 megawatts from hydel power-rich Bhutan by 2020.

"It is expected to boost the economic growth of Bhutan while helping augment electricity supply in India," a Bhutanese statement said.

The agreements were signed during the six-day visit of Bhutan's monarch, Jigme Singye Wangchuck, to India.