DHAKA - India and Bangladesh Monday rejuvenated their multi-faceted ties by signing two economic pacts and joining hands to combat the growing menace of terrorism in the region.

External Affairs Minister Pranab Mukherjee, who is on a day-long visit to Dhaka, held talks with his Bangladeshi counterpart Dipu Moni on an entire gamut of bilateral issues, including security, terrorism, intensification of economic ties, border management and improving connectivity.

The two sides after the ministerial talks signed two pacts on bilateral trade and bilateral investment protection.

‘These would further strengthen the framework for trade and investment between both countries,’ Mukherjee said at a joint press conference with Moni.

This is the first high-level visit from India to Bangladesh since Sheikh Hasina, known for her pro-India views, assumed office early this year after winning a landslide victory in the December 2008 parliamentary polls.

‘As a close and friendly neighbour, India warmly welcomes the return to multi-party democratic politics in Bangladesh and looks forward to closely working with the newly elected government under the leadership of Prime Minister Sheikh Hasina to further strengthen the ties between both countries,’ Mukherjee said.

Underlining India’s hope for better security cooperation with Bangladesh under the leadership of Sheikh Hasina, Mukherjee urged Bangladesh to combat terrorism jointly.

‘An area of concern for both countries is to combat the growing menace of extremism and terrorism in the region. Closer cooperation on security issues is the need of the hour,’ he said.

‘We should move to address such issues with the understanding that both our countries will benefit in the long run,’ he stressed.

The Bangladeshi side backed Mukherjee’s call for jointly combating terrorism, official sources said.

Mukherjee’s visit to Dhaka comes at a time when an internal Pakistani probe has reportedly found the links between a militant group in Bangladesh and the Mumbai terror strikes in India.

Mukherjee also unveiled the model of the 2,800 core shelters, which India would be constructing soon in the 11 villages affected by cyclone ‘Sidr’ in Nov 2007.

India has already provided Bangladesh aid including cash assistance of $10 million, essential items including rice and milk powder worth $40 million. In the aftermath of the 2007 cyclone, India sent an emergency relief package of essential commodities and waived ban on export by sending 500,000 tonnes of rice to Bangladesh.