Prime Minister Narendra Modi held wide-ranging talks with his Bhutanese counterpart Lotay Tshering on Saturday during which the two leaders discussed steps to further expand the bilateral partnership across several sectors.

"Infusing new energy and trust in our close relationship. PM @narendramodi held delegation levels talk with @PMBhutan Lyonchhen Dr. Lotay Tshering. Discussed steps to further expand our partnership across several sectors," Ministry of External Affairs spokesperson Raveesh Kumar tweeted.

Kumar said the MoUs exchange will take place at Simtoka Dzong, built in 1629 by Shabdrung Namgyal, which functions as a monastic and administrative centre and is one of the oldest dzongs in Bhutan.

This is Modi's second visit to Bhutan and the first since his re-election in May this year.

Prime Minister Modi also inspected a guard of honour during his ceremonial welcome at Tashichhodzong Palace, Bhutan.

"Traditional Chipdrel procession and welcome ceremony at the Tashichhodzong Palace for PM @narendramodi before the audience with His Majesty the King of Bhutan. The ceremony symbolises the purification of path along which the guests are led," Kumar tweeted.

Earlier, Prime Minister Modi received a red-carpet welcome at the Paro airport where he was received by the Bhutanese prime minister.

"I am extremely grateful to @PMBhutan for welcoming me at the airport. His gesture is deeply touching," Modi tweeted.

"A memorable welcome in Bhutan! This is a land blessed with natural beauty and wonderful people. There is immense enthusiasm here and the people of Bhutan want to see the India-Bhutan friendship scale newer heights of success," the prime minister said.

Waving the Indian tricolour and the Bhutanese flags, people lined up along the route from Paro to the capital city Thimphu to welcome Prime Minister Modi, who is in Bhutan on a two-day visit.

Prime Minister Modi will also address young Bhutanese students at the prestigious Royal University of Bhutan.