India has agreed to consider Bangladesh's request for additional trade facilities as a least developed country in exchange for permission for a natural gas pipeline from Myanmar to India to pass through its territory.

Petroleum ministry officials said a memorandum of understanding

(MoU) is likely to be signed this month although press reports from Dhaka said the country is still not convinced about the project according to New Delhi-based magazine Business Standard published yesterday.

Senior officials told Business Standard that Petroleum Minister Mani Shankar Aiyar conveyed India's decision to Bangladesh leaders during his visit earlier this week.

"Before the minister left India, he had met Prime Minister Manmohan Singh who mandated him on giving an assurance to this effect. Singh wanted that Bangladesh's concerns be addressed in order to speed up the implementation of the project," an official said.

India already permits duty-free import of 90 items from Bangladesh but the South Asian neighbour had been complaining of non-tariff barriers coming in the way of export of these products, particularly for leather, food and textile items. The balance of trade lies in favour of New Delhi, with India exporting goods worth $3 billion while imports are at $100 million.

Aiyar said India will permit transmission of power from Bhutan and Nepal to Bangladesh once a grid for the entire Saarc region is established.

On the issue of permitting transit of Bangladeshi vehicles, India said as and when the traffic flow increases, more points will be made available. At present, the Phulbari transit point is opened for two hours daily and on an average 40 trucks pass through it in a month.

ONGC and Gail together hold 30 percent stake in two oil and gas blocks in Myanmar. India was also looking at the options of bypassing Bangladesh or setting up a power plant in Myanmar and importing electricity from there.

"Once the pipeline route is finalised, preparation of a detailed project report and finalising the funds for the project will take two years. The pipeline could be operational by 2009," the official said.