Manmohan Singh held restricted talks with Thein Sein on tackling terrorism and expanding trade on the second day of his three-day visit - the first by an Indian prime minister in a quarter century.
The prime minister, who landed in the capital on May 27, told Thein Sein at the 100-room presidential palace that India was committed to strengthening its 'economic and development partnership with Myanmar'.
India and Myanmar have 'embarked on a new journey of bilateral co-operation', said Manmohan Singh, one of the growing number of world leaders to come visiting after the military population decided to embrace democracy.
He also commended Thein Sein for introducing dramatic political reforms that have seen elections, leading to the entry into parliament of long-time political prisoner Aung San Suu Kyi.
"We wish you all success in your nation-building efforts and the changes you are bringing about," he said.
A joint statement issued after their meeting said that both leaders agreed on fighting 'the scourge of terrorism and insurgent activity in all its forms and manifestations', a reference to the festering issue of Indian rebels operating from inside Myanmar.
The visit saw the two leaders agree to 'co-operate in the areas such as border area development, transportation, connectivity, agriculture, trade and investment, promotion of friendly exchanges and human resource development'.
Manmohan Singh 'commended the ongoing efforts at political, economic and social reform, which included negotiation of preliminary peace agreements with several ethnic groups as well as dialogue with various democratic political parties including the National League for Democracy led by Suu Kyi'.
They agreed to promote cooperation among their security forces and border guards.
The leaders reviewed the progress on the Kaladan Multi-modal Transit Transport Project that connects Myanmar to Mizoram and the finalisation of the site of the Land Customs Station at Zorinpui (Mizoram).
India announced that it would undertake the task of repair/upgradation of 71 bridges on the Tamu-Kalewa friendship Road.
It would also upgrade the Kalewa-Yargyi road segment to highway class, while Myanmar would upgrade the Yargyi-Monywa stretch by 2016. This would help set up connectivity from Moreh in India to Mae Sot in Thailand via Myanmar.
The two sides agreed to launch a bus service from Imphal to Mandalay.
The new Air Service agreement would enhance direct air connectivity. The two countries would also explore rail and shipping links.
Both leaders emphasized that there was considerable untapped potential for greater trade, especially in areas like ports, highways, oil and gas, plantation, manufacturing, hospitality and ICT.
Also, the Reserve Bank of India would sign an MoU with the Central Bank of Myanmar on currency arrangements.
India-Myanmar trade is currently pegged at just USD1.2 billion. New Delhi is looking at doubling it by 2015.
On May 29, Manmohan Singh goes to Yangon, where he will meet Suu Kyi.