Prime Minister Manmohan Singh on Monday held talks with Myanmar President Thein Sein as India suggested the two countries should work out a joint strategy to tackle terrorism and insurgency along their border and enhance security cooperation.

Singh, the first Indian Prime Minister to visit Myanmar in 25 years since Rajiv Gandhi's trip in December 2007, held restricted talks with Sein before the two leaders led their respective delegations for discussions on a range of bilateral, regional and international issues.

Earlier, Singh, who is accompanied by External Affairs Minister S M Krishna and senior officials, was given a ceremonial on the lawns of the Presidential Palace.

Wearing flip-flops and a 'longyi', the traditional Myanmarese sarong, President Sein warmly shook hands with Singh and his wife Gursharan Kaur soon after the two dignitaries reached the Palace this morning.

Ahead of the Prime Minister's talks with President Sein, Krishna said both India and Myanmar are facing terrorism and insurgency and hence "it is necessary that both of us work out a joint strategy as to how to meet with these terror elements".

"Also, there are insurgents on either side. So, I think we have to work out an understanding to tackle it. We have an understanding with Myanmar, we have been cooperating with Myanmar and it is necessary to deepen this cooperation," he said.

Krishna stressed on the the economic content of India's relationship with Myanmar saying "this too is equally important. Myanmar is a developing country like India. They have come out of some problems internally and now they seem to be settling down and it is about time for them to devote time and to launch a developmental agenda, I think people of Myanmar need India's assistance and India would be willing to assist them."

Krishna's remarks came in the backdrop of Myanmar government signing a ceasefire with Naga insurgent group NSCN (K) and India expressing happiness over the development.

Asked about growing Chinese presence in Myanmar, Krishna said: "each country has its own relationship. Myanmar has its relationship with China, India has its relationship with China. So, let us not mix up issues and each relationship stands independent of each other, on a pedestal created over a period of time and history."

High on Singh's agenda of talks are cooperation in energy and trade sectors, enhancement of road, rail and air links setting up a passenger bus service between Imphal and Manadalay, Myanmar's second largest city, expediting the Kaladan multimodal transport project over Irrawady river and the Sittwe port that are expected to give India easier access to its northeastern states.

The two countries had formally agreed on Kaladan Multimodal Transit Transport Project in April 2008 and work began on Sittwe port in September 2010.

Indian conglomerate Essar Group is building the port on 70,000 square metres (753,000 sq ft) of landfill in Sittwe's centre where the port will accommodate ships from Kolkata, a 539-km journey across Bay of Bengal and handle up to 500,000 tonnes a year.

From Sittwe, ships will sail up the Kaladan River to the town of Paletwa, where Essar will build a second and a smaller port. A 122-km highway will connect Paletwa to Mizoram.

As Myanmar emerges from decades of isolation, trade with India is already swelling. Myanmar's government expects the two-way trade with India to nearly double in two years to USD 3 billion from USD 1.4 billion at present.

India is Myanmar's third-biggest export market after Thailand and China and is fourth largest trading partner of this country after China, Thailand and Singapore.

However India is aware of Myanmar's strategic significance 'because of China's increasing economic presence and anxiety about a possible future Chinese presence on the Bay of Bengal,' he says.

Not far south of Sittwe, Chinese money is funding a bigger port and special economic zone in Kyaukphyu, a coastal town where Myanmar-China pipelines reach the Bay of Bengal, creating a passage from western China to South and Southeast Asia and allowing shipments of fuel and natural resources to avoid the Malacca Strait.

A delegation of Indian business officials are now here coinciding with the Prime Minister's visit, said a Ministry of External Affairs Ministry official, adding India was also looking at setting up a special economic zone.