Indian Foreign Minister Yashwant Sinha arrives in Dhaka today to hold wide-ranging talks with Bangladeshi Prime Minister Begum Khaleda Zia and Foreign Minister Morshed Khan.
Mr Sinha is the first Indian dignitary to visit Bangladesh since Begum Zia wrested power from the pro-India Awami League Party in October.
Analysts said the focus of the talks will be on economic issues such as the huge trade imbalance between the two countries, water-sharing, gas exports and trans-shipment of Indian goods through Bangladesh.
Bangladesh's exports stand at only US$50 million (HK$389 million) against the official import of Indian goods worth about US$1.2 billion annually.
Significantly, a high-powered government committee submitted a report to the Bangladesh government on Wednesday opposing gas exports to India until new gas reserves are found.
Also high on the agenda is the demarcation of the India-Bangladesh border, particularly a highly contentious 6.5km stretch in the Meghalaya sector where 15 Indian border guards were killed in April last year, and the influx of Bangladeshis into India.