India needs energy - which Iran can supply.

Jaswant Singh: Five-day visit

A proposal to build a gas pipeline between the two countries has been around for some time, although the two have yet to announce a decision on the matter.

Agreement on this has been stalled over the question of how to get the gas to India.

Any overland pipeline would have to run through Pakistan, and India wants the energy supply issue to be settled bilaterally, without the involvement of Islamabad.

Iran in turn is looking for Indian expertise in computer technology.

Afghanistan

The second area of mutual concern is the Afghanistan question.

Both countries have recently developed better relations with Kabul - even if many of the old suspicions still exist.

Mr Singh and Mr Khatami have said that Afghanistan has provided a focus for cooperation during this round of talks.

Iran views its neighbour as lawless and is alarmed at the increase in drug trafficking and arms smuggling along the border.

Last week Iran said it was going to put $25m towards strengthening its eastern border.

India views Afghanistan with suspicion of what it calls terrorist activities, even though it publically praised the role of the Taleban earlier this year in bringing an end to the hijack of an Indian Airlines plane in Kabul.

Delhi has long maintained that Afghan fighters are partly responsible for attacks in Indian-administered Kashmir.

This is a key reason why India wants a higher profile in attempts to contain Afghanistan.