The decision was taken at the meeting of the Indo-Nepal Joint Commission co-chaired by External Affairs Minister Sushma Swaraj and her Nepalese counterpart Mahendra Bahadur Pandey. The meeting took place after a gap of 23 years.
The JC also directed Nepal-India Boundary Working Group to commence field works at the earliest.
Late evening, the two sides issued a joint statement which said the meeting reviewed the entire gamut of Nepal-India relations and affirmed that the Joint Commission would make an important contribution to strengthen the traditionally warm and close relations between the two countries.
According to the joint statement, Nepal reiterated its support for India's candidature for permanent membership of the UN Security Council.
"The Joint Commission reiterated the need for reviewing, adjusting and updating the Treaty of Peace and Friendship 1950, reflecting the current realities. It directed the Foreign Secretaries to make necessary recommendations.
"The Joint Commission also directed the Nepal-India Boundary Working Group to commence field works at the earliest," the statement said.
The two ministers noted Nepal's trade deficit with India and agreed to take effective measures to address the problem.