Bangladesh says the planned fence is a violation of a 1974 treaty
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Indian and Bangladeshi border guards have exchanged fire over a disputed fence along the border between the neighbouring countries.
The exchange of fire on Friday in the north-eastern Indian state of Tripura lasted for three hours but there were no casualties.
Bangladesh says the disputed fence violates a 1974 defence treaty between the two countries but India disagrees.
A number of issues have strained India-Bangladesh relations recently.
The Indian border security chief in Tripura, Suresh Kumar Dutt, told the BBC that troops from the Bangladesh Rifles opened fire on Indian construction workers on Friday morning.
The workers were trying to erect the border fence at Mandirghat in southern Tripura, he said. Tripura borders the Bangladesh district of Khagracherri.
Mr Dutt said Indian troops in the area retaliated when the firing intensified.
Infiltration
Bangladesh says that the planned fence is a violation of a bilateral treaty which stipulates that no defence works can be built within 150 metres of the India-Bangladesh.
It says the fence that India is trying to construct falls within the no-build zone, says our correspondent in the Bangladesh capital, Dhaka.
Indian border security chief says the fence will be built
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The Indians say the fence is only meant to prevent illegal infiltration and cross-border movement of rebels active in Indian territory.
The BBC correspondent in the eastern Indian city of Calcutta says India does not consider the fence a defence work.
Mr Dutt said work on the fence would continue.
Officials in Bangladesh say Indian border guards have tried to construct fences along other parts of the border over the past month.
They say most of these attempts were abandoned after resistance from Bangladeshi troops.
A meeting between the deputy chiefs of the two forces is scheduled for 14 March in Agartala, India.
Indian plans to link rivers, which Bangladeshis say will threaten the north of their country, have soured ties between the nations.
India also annoyed Bangladesh by refusing to attend a regional summit in Dhaka recently, citing security concerns.