Indian and Bangladeshi leaders have agreed to a deal that would settle their countries' long-running border dispute.

Indian Prime Minister Manmohan Singh signed the agreement demarcating the 4,000 kilometer border between the two nations, during a visit Tuesday to Bangladesh.

The deal allows for the exchange of 111 Indian enclaves in Bangladesh and 51 Bangladeshi enclaves in India.

Following talks with Bangladeshi Prime Minister Sheikh Hasina in Dhaka, Mr. Singh also said that India had agreed to grant duty-free access to 46 Bangladeshi products, mainly textiles.

Prime Minister Singh's two-day visit to Bangladesh is the first by an Indian leader since 1999.

The two countries have had trouble maintaining good ties despite India's help in Bangladesh's secession and independence from Pakistan in 1971. Relations soured after a 1975 military coup in Bangladesh and a series of low-level border clashes.

Despite signing trade and border deals Tuesday, the Indian and Bangladeshi leaders failed to agree on a key deal to share water from the Teesta River, which runs between the two countries.

The terms of the deal were opposed by Mamata Banerjee, the chief minister of West Bengal, the Indian state bordering Bangladesh.

Banerjee pulled out of Mr. Singh's delegation to Bangladesh, saying the proposed new treaty conceded too much to Bangladesh.

Prime Minister Singh said Tuesday that the two sides agreed to continue discussions on the water-sharing issue.

His visit follows Ms. Hasina's trip to India last year.

The Indian prime minister is expected to meet with Khaleda Zia, Bangladesh's main opposition leader and former prime minister, on Wednesday.