The visit is expected to break fresh grounds in not-so-warm bilateral relations and it will, overall, create a right atmosphere for further dialogue in resolving the long-standing issues as well as to further strengthen relations between the next-door neighbours.

Diplomatic sources said the Indian side is careful not to highlight the differences and problem areas, Bangladesh too will avoid raking up the issues that has divided both the countries so far.

This will be Khaleda Zia's first official visit to India in her last four years in power and it comes in the year her tenure winds up. Her government's term ends in October and the caretaker administration will take over in anticipation of national elections around January.

The visit by Khaleda ahead of Bangladesh's Independence Day is scheduled to start on March 20 at the invitation of the Indian prime minister.

Dhaka pins high hopes and is looking forward to this month's summit level meeting between Prime Minister Khaleda Zia and her Indian counterpart Manmohan Singh. The two leaders will discuss a range of bilateral issues including security, trade, transit, water and defence exchanges.

The official talk on March 21 is expected to be followed by the signing of a number of deals to enhance bilateral cooperation which the officials of the two capitals are now working on. Officials said the main focus of the visit is to enhance cooperation in trade, investments and the IT sectors.

High official sources said the two leaders will have a frank and candid discussion and Dhaka considers the atmosphere as perfect for the talks. The successful summit of 13th South Asian Association for Regional Cooperation (Saarc) in Dhaka in November last year and Indian premier's visit to Dhaka created an atmosphere and set the stage for Khaleda's long awaited tour to India.

Nothing has happened in the last four years regarding resolving the contentious bilateral issues and there were ups and downs in the relations in the last few months when the two sides began high level exchanges of visits and meetings took place in Dhaka and New Delhi.

Official sources said Dhaka would take up its main concerns like huge trade deficit, sharing of the waters of the common rivers and the Indian river linking project, border-related issues like smuggling of drugs and arms, long-standing problems of land-boundary demarcation, handing of adverse possession and enclaves and fencing of border violating Indo-Bangladesh treaties. Bangladesh is concerned about criminals taking shelter in India as well as anti-Bangladesh campaign by certain groups in India.

Highly placed sources said Bangladesh and India have a huge trade deficit of about $1.5 billion in favour of India. Dhaka has long been pressing New Delhi to reduce the trade imbalance by opening Indian market for Bangladeshi products by removing tariffs and non-tariff barriers.

India's export to Bangladesh is over $ 2 billion while informal exports are believed to account for another $ 2 billion a year. While Bangladesh's export is around $ 144 million annually.

Officials said Bangladesh has given maximum trade facilities to India and Indian products have flooded the Bangladesh market. But India does not give Bangladeshi products access by imposing tariff, para-tariff and other barriers.

India has been suggesting Delhi-Dhaka Free Trade Agreement (FTA) to remove the trade gap.

For New Delhi, a major concern is security along the porous 4,200-km-long border between India and Bangladesh where illegal crossings are common.

At the upcoming talks between Khaleda and Manmohan, Indian sources said New Delhi would push for accords on extradition, express concern about the "presence and activities of Indian insurgent groups in Bangladesh," halting illegal migration from Bangladesh, allowing border fencing and development work to be undertaken.

Bangladesh reiterated its stand on not allowing any terrorist groups operating from the country against India.

India is also expected to ask Bangladesh to allow the use of Chittagong Port, introduction of Agartala-Akhaura train service, and the go-ahead for tri-nation gas pipeline.

A range of security related concerns such as killings of Bangladeshi nationals in the border areas, barbed-wire fencing violating border treaties, India's allegation of north-eastern rebels operating from Bangladesh territory, and illegal migration from Bangladesh affected cooperation for last several years.

Sharing of waters of the common rivers and Bangladesh's concerns about the Indian River Linking Project have long been remaining unresolved. Bangladesh has been opposed to India's plan of river networking due to fears of its being deprived of its share of water. India, however, assured Bangladesh government that India would not take a unilateral decision on the river linking issue.

The $2.5 billion Myanmar-Bangladesh-India pipeline project is another area of contention between the two countries. Dhaka wants transit facilities through India for hydroelectric power from Nepal and Bhutan to Bangladesh, a corridor for trade between the two Himalayan kingdoms, and measures to reduce the bilateral trade imbalance before signing this agreement.

But for India, these issues are bilateral matters and it considers the preconditions unreasonable for the "commercial" pipeline project especially when India is ready to pay an expected transit fee of $125 million annually to Bangladesh.

Diplomatic sources said Khaleda Zia's visit, though belated, is expected to bring a significant change in the Indo-Bangladesh ties that could not happen earlier for various reasons.

"Anything can be discussed by the two prime ministers but Bangladesh will try to address the large trade gap issue with the two countries, removal of trade barriers, sharing water of common rivers and ensuring a peaceful border," said a high official of the ministry of foreign affairs.

"There are no insurmountable issues between us (India and Bangladesh)," Singh told reporters during the Saarc Summit in Dhaka, adding that, "India would do nothing to hurt the interest of Bangladesh and by helping Bangladesh, we would be helping ourselves."

During her meeting with Singh in November, officials said Khaleda had told him Bangladesh wants the "best of relations" with India and made it very clear that Bangladesh was ready to resolve all outstanding issues with India amicably through talks on the basis of friendship, trust and understanding.

An Indian diplomat in Dhaka said some positive steps have been taken by Bangladesh to remove Indian concerns that have been souring the relations between the two neighbours.

He said New Delhi is committed to strong bilateral relations with Dhaka and added that India and Bangladesh must remain closely engaged and work together in the fast changing world.