Manmohan told Fakhruddin last night that 'prosperous, stable and democratic Bangladesh is in India's interest', and also felt that the anti-corruption drive and electoral reforms being carried out by the current interim government of Bangladesh are 'very positive'.

"The two leaders decided that the bilateral mechanism will be activated based on mutual interest to resolve the outstanding irritants and problems between the two countries," said Bangladesh's Acting Foreign Secretary Touhid Hossain in a news briefing after the meeting.

"The chief adviser briefed the Indian prime minister about the anti-corruption drive and his government's commitment to hold widely accepted elections," said Touhid adding, "The response was very positive."

Asked whether this indicates a major shift in Bangladesh's relationship with India Touhid said, "Yes, you might say it is to go on a new trajectory."

On the eve of the Saarc summit starting in New Delhi today, the first meeting of the two leaders was described by Indian Foreign Secretary Shivshankar Menon as having the 'first contact'.

Menon said Bangladesh and India are starting a 'new relationship' and will discuss the 'whole gamut' of outstanding issues.

Refusing to delve into specific details about the crucial bilateral meet, Touhid said both leaders agreed that the relationship should move forward.

Touhid also said Bangladesh and India will have train links as soon as the two countries have the 'logistical issues' sorted out.