He also paid a visit to Janaki temple earlier and offered special prayers. The Ramayan Circuit is one among the 13 tourist circuits under the "Swadesh Darshan Scheme" of India.
Mr Modi and Mr Oli will jointly lay the foundation stone for Arun 3 hydropower project. He underlined the need for linking Nepal and India through highway, I-way or information highway, railway, transway or electric connectivity, waterway and airway. "They are living testimony to the ancient and strong cultural and religious ties between the peoples of India and Nepal", he said. "This will certainly lead to effective fulfilment of the aspirations of Nepal's citizens", PM Modi tweeted.
After his visit to the temple, Modi launched a bus service between Janakpur-Ayodhya.
"We know that the regional development is connected with the development of Nepal".
Modi and Oli agreed to convene an early meeting to take forward the construction of the 5,000-MW Pancheshwar multipurpose project.
The incident angered young people in landlocked Nepal, which depends on India for supplies and access to the sea.
Modi responded by saying that this was his third visit to Nepal since assuming office in 2014, and it showed his government's "deep commitment" to further strengthen ties with Nepal.More news: Australia's worst mass shooting in 22 years
The project is expected to bring in United States dollars 1.5 billion foreign direct investment into Nepal and create jobs for thousands of people.
Tripathi also said that India has not paid much attention to Nepal, whereas on the other hand China has been investing a lot.
However, Rakesh Sood, India's former Indian ambassador to Nepal, begged to differ.
He said that India would continue to remain a steadfast partner of Government of Nepal to implement the vision of "Samriddha Nepal, Sukhi Nepali".
Kathmandu blamed New Delhi for the blockade, which caused a crippling shortage of fuel and goods as the country struggled to recover from a devastating natural disaster earlier that year. However, he also agreed that a few mistakes done on India's part have definitely made Nepal suspicious about India's intentions, starting from the economic blockade done during the Rajiv Gandhi government, and the other things that followed.
Nepal's defence minister Ishwor Pokharel welcomed Prime Minister Modi at the function. Indian PM Modi is landing in Kathmandu at 1.30 pm.
He is scheduled to meet President Bidhya Devi Bhandrai and Vice President Nanda Bahadur Pun.