Nepal and India have agreed to renew their transit treaty under which India provides fifteen transit routes for land-locked Nepal to export its goods through the port of Calcutta.

The treaty's renewal had been delayed by a month, which sparked off uncertainty about its future.

The Indian Commerce minister, Ram Krishna Hegde, who signed the treaty with his Nepalese counterpart, Purna Bahdur Khadka, in Kathmandu,said the delay was caused by the Indian government's preoccupation with domestic politics.

The treaty will in future be renewed automatically.

Mr Hegde also said he hoped Nepal would check smuggling and terrorist activities -- a reference to Indian suspicions that Pakistan is using Nepal as a base for exporting terrorism to India.