Under the agreement, India will have an advantage of 500 acres and 10,000 acres will go to Bangladesh.

On Prime Minister Narendra Modi’s maiden visit to Dhaka, India and Bangladesh on Saturday sealed a historic agreement that will settle a 41-year-old land boundary dispute through exchange of territories, removing a major irritant in bilateral ties.

The two sides exchanged documents regarding the Land Boundary Agreement (LBA) that was passed unanimously by the Parliament last month in the presence of Mr. Modi and his Bangladeshi counterpart Sheikh Hasina besides West Bengal Chief Minister Mamata Banerjee.

“History is made as the Instruments of Ratification of the Land Boundary Agreement are exchanged,” Mr. Modi tweeted.

The exchange of documents paves way for the operationalisation of the 1974 India-Bangladesh LBA that provides for exchange of 161 enclaves between the two countries. A total 111 border enclaves will be transferred to Bangladesh in exchange for 51 that will become part of India.

Ahead of his visit, Mr. Modi had said the Agreement marked a “watershed moment” in India’s ties with Bangladesh.

Under the agreement, India will have an advantage of 500 acres and 10,000 acres will go to Bangladesh.

The agreement settles the question of citizenship for over 50,000 people.

The issue has been a major irritant in ties between the two countries which share a 4,096-km-long border, most of which is porous.

The settlement of the LBA comes as both countries have settled their maritime boundary.

On July 7, 2014, the Hague-based Permanent Court of Arbitration delineated the maritime boundary between the two neighbours, the Exclusive Economic Zone and the continental shelf within and beyond 200 nautical miles.

Foreign Secretary S. Jaishankar, briefing reporters on Friday, said ratification of the LBA would help in improvement of the security situation, deal with trafficking, drug smuggling, in smuggling of counterfeit notes.

A demarcated border would also bring clarify and discipline and also help boost connectivity, the foreign secretary said.

With settlement of the boundary, both countries can move towards building border of infrastructure, especially in the north east to boost trade and sub-regional connectivity.