India and Bhutan will build the first cross-border railway lines connecting the two countries, New Delhi announced on Monday.
The $454-million project is expected to be completed in four years.
Indian foreign secretary Vikram Misri said his country, which is Bhutan's main trading partner, "has played a vital role" in the modernisation of the Himalayan kingdom's infrastructure and economy.
The rail project will be of "huge benefit to the people of Bhutan," India's Minister of Railways Ashwini Vaishnaw said.
"The entire area will get connected. And lots of goods movement, which takes days today, will start happening in a few hours."
An initial 69-kilometre (43-mile) railway, estimated to cost 34.56 billion rupees ($390 million), will connect India's northeastern city of Kokrajhar to Bhutan's Gelephu, a town of 10,000 people near the Indian border.
‘South Asia’s hub’
A second 20-kilometre railway line, expected to cost $65 million (5.77 billion rupees), will link Bhutan's northwestern industrial centre of Samtse to Banarhat in eastern India.
Tiny and landlocked, with a population of less than 800,000, Bhutan is wedged between China and India and is known for its policy of prioritising "Gross National Happiness" over growth.
But it aims to develop Gelephu as an economic zone to attract foreign investment and tourists, with the new railway playing a key role in its development.
"It is envisaged as an economic hub connecting Bhutan with South Asia and Southeast Asia," Misri said.
Vaishnaw said that the new trainlines will be electric and designed to be as environmentally friendly as possible.
