New Delhi, Sep 8 - India Tuesday allayed Bangladesh's concerns over the contentious Tipaimukh dam and hydroelectric project while the neighbours agreed to step up cooperation to combat terrorism and bridge differences on trade and transit issues.

With their relations on an upward curve after a protracted period of drift, the two countries also tried to narrow differences on illegal migration, cross-border infiltration and sharing of river waters.

External Affairs Minister S.M. Krishna held wide-ranging talks with his Bangladeshi counterpart Dipu Moni and pressed for closer cooperation in combating terrorism, and emphasised the need for intelligence sharing and closer coordination.

The talks lasted over two hours and included a one-to-one interaction between the two ministers for 10 minutes.

Foreign Secretary Nirupama Rao was also present at the delegation-level talks. The Bangladeshi delegation included Foreign Secretary Mijarul Quayes, Bangladesh High Commissioner Tarique Ahmed Karim and Mohammad Imran, director general (South Asia).

Moni, who is on her first official visit to India after Sheikh Hasina came to power eight months ago, assured Krishna that Dhaka was keen to jointly combat terrorism and address New Delhi's concerns about insurgents allegedly operating from the Bangladeshi territory.