"We signed an initial agreement recently and we will begin the project as soon as the (Indian) cabinet gives approval," said the senior official who declined to be named.

"The proposal will be put up to the cabinet this month. Once cleared it will take about three to four years for the project to be completed," he said.

The port project would mark the latest cooperation venture between New Delhi and military-ruled Mynammar.

India has been keen to develop closer links with Myanmar, formerly known as Burma, because of its huge reserves of gas and proximity to South East Asia.

The port will allow cargo vessels from India's landlocked northeastern Mizoram state to navigate the Kaladan River to Sittwe, which sits on the edge of the Bay of Bengal.

"The project involves the development of roads, waterways and the Sittwe port," the official said.

"The aim is to obtain an alternate transit route for products from India's northeast to South East Asian markets, as Bangladesh has not yet allowed India transit facilities."

New Delhi has repeatedly asked Bangladesh for an overland route but many rounds of talks between the two neighbours have yielded no results.