NEW DELHI (BLOOMBERG) - India reassured Bangladesh it would prioritise the supply of Covid-19 shots to its South Asian neighbour, part of its vaccine outreach to counter China's rising influence in the region.

India's Prime Minister Narendra Modi and Bangladesh's Sheikh Hasina met in a virtual summit on Thursday (Dec 17) - the first high-level meeting of the leaders from the two countries since relations nosedived when India passed its controversial religion-based citizenship law late last year.

"India and Bangladesh are cooperating well on the Covid vaccine," Mr Modi said at the summit's inauguration, adding that New Delhi "will pay special attention" to Bangladesh's immunisation requirements.

Ms Hasina said the two countries can move up global value chains by further integrating their economies.

She also announced the inauguration of the Chilahati-Haldibari trans-border railway link between the countries that had stopped functioning in 1965.

Last December, Bangladesh's Foreign Minister A.K. Abdul Momen and Home Minister Asaduzzaman Khan had both called off visits after nationwide protests erupted in India against its new citizen law.

The new law fast-tracks Indian citizenship for non-Muslims from three neighbouring nations, including Bangladesh.

New Delhi has since been making overtures to smoothen relations with Dhaka, with whom it has a long history of cooperative ties.

Indian Foreign Secretary Harsh Vardhan Shringla visited Bangladesh twice this year.

The second visit in August came amid rising border tensions with China, which has committed US$40 billion (S$53 billion) in investments in Bangladesh.

On Thursday, the two countries signed seven agreements relating to trade, energy and agriculture.

Annual trade between India and Bangladesh stood at US$10.25 billion in the fiscal year ended March 2019, Indian government data shows.

Dhaka was also expected to raise the issue of management of trans-boundary rivers, including the long-pending water-sharing agreement for the river Teesta.

India's Foreign Minister Subrahmanyam Jaishankar and his counterpart Momen had in September noted their commitment to finalising an interim deal in a dispute that has lingered since the 1980s without any resolution.

The "long-drawn failure to sign the Teesta river water agreement" and the new citizenship law have together "unsettled public opinion in Bangladesh" against New Delhi despite decades of close ties, said professor of international relations Delwar Hossain at Dhaka University.

"Now Covid-19 has brought the two nations together once again."

Bangladesh's Beximco Pharmaceuticals signed an agreement with the Serum Institute of India in November for 30 million vaccine doses, shortly after India's Jaishankar committed supplies to Dhaka during his meeting with Mr Momen.