The announcements were made after Prime Minister Narendra Modi and his Bangladeshi counterpart Sheikh Hasina, on a four-day state visit, held bilateral talks here.

"We are happy to announce a concessional line of credit of $4.5 billion for investment in priority sectors in Bangladesh," Modi said at a joint address with Hasina at Hyderabad House.

"India has always stood for the prosperity of Bangladesh. We are a long-standing and trusted development partner of Bangladesh," he said, speaking at length about the Indian investments assured to Bangladesh.

He said India wanted to build cooperation in new areas with Bangladesh "especially in some high-technology sectors which would include working in the fields of electronics, Information Technology, cyber security, space explorations and civil nuclear energy".

The two countries also agreed to work closely on peace and security and build cooperation between their armed forces.

"While our partnership brings prosperity to our people, it also works to protect them from forces of radicalisation and extremism. Their spread poses a grave threat, not just to India and Bangladesh but to the entire region," Modi said.

He promised India would give an additional credit of $500 million to Bangladesh for military supplies and it would be driven by Dhaka's needs.

Hasina appreciated Modi "for his dynamism and innovative ideas that are not only taking India forward but adding value to our bilateral relationship". 

She said her government would take all necessary action to ensure peace and security along the India-Bangladesh border and asserted there would be zero tolerance against terror.

Modi praised as an "inspiration for all of us" Hasina's "firm resolve in dealing with terrorism and her government's zero-tolerance policy towards terrorism".

At a separate event to hail Indian soldiers who fought the 1971 war that led to the birth of Bangladesh, Modi in a veiled attack on Pakistan said a "mindset" in South Asia was encouraging terrorism. "India and Bangladesh are its victims.

"I am very clear that along with India, its neighbouring countries should also move ahead on the path of development. We want development of the entire region. But there is a mentality in South Asia against this mindset. A mindset that promotes terrorism, which has a value system which is not based on humanity, but on violence and extremism."

He said policy makers with that mindset "feel terrorism is bigger than humanity, destruction is bigger than creation, and betrayal is bigger than trust".

"This mentality is the biggest challenge to peace, social harmony and development. This mentality obstructs development in the whole region."

Hasina said her country was indebted to India for its role in the birth of Bangladesh.

"People of South Asia will be the beneficiary of our friendly relations," she said, adding Dhaka would upgrade its visa office in Agartala after having reopened a diplomatic mission in Guwahati.

The two leaders jointly inaugurated via video link a new bus service to link Kolkata and Dhaka via Khulna in Bangladesh.

They flagged off the Maitree Express, which will run between Kolkata and Khulna, while restoring the defunct Radhikapur-Khulna passenger train service, which will resume in July after nearly 70 years.

On the Teesta water sharing issue pending between the two countries, Modi said he was hopeful of an "early and acceptable solution" with Bangladesh.

Hasina reached New Delhi on Friday and will end her India visit on Monday.