India has said it wants to see a secular, democratic and stable Bangladesh in its own interest and is confident that the interim government will work on restoring a political system based on the representation of people.

"A secular Bangladesh that respects diversity is important for us," Minister of State for commerce Jairam Ramesh said.

He said New Delhi believes that Bangladeshi people would decide their political system through a transparent election. "We are confident that the current (interim) government in Bangladesh is committed to the restoration of a political system that is based on the representation of people".

"A peaceful, stable, democratic and prosperous Bangladesh is in India's own national interest," he said.

He said India expects that Bangladesh will not allow its land for terrorist activities against its neighbour. Ramesh, who is on a two day visit to Dhaka, said Dhaka needs to grant New Delhi transit facilities and agree to the large scale investment proposals made by the Indian companies to reduce massive trade gap and up bilateral trade between the two countries to $20 billion in five years.

Bangladesh should also allow India access to the New Mooring Terminal, open up the Demagiri-Thegamukh land route and hold equity share in a 1,110 MW power station, which is being set up in Agartala, Ramesh said.

"I want to make a point that transit is not only a concern for India but also for Bangladesh as it could be a major supplier to the north and eastern parts of India using the transit facility," the minister said acknowledging that the long standing issue was a political "hot potato" in Bangladesh.

"Bangladesh can be a major source of commodities for the 30 to 40 million people living in north-eastern India," he said.

Later in the day, India is expected to sign a memorandum of understanding with Bangladesh to import 8 million pieces of readymade garments.

During his visit, Ramesh held talks with commerce adviser Mirza AB Azizul Islam, Foreign Adviser Iftekhar Ahmed Chowdhury and paramilitary Bangladesh Rifles chief Major General Shakil Ahmed and called on President Iajuddin Ahmed at the Bangabhaban presidential palace.