India and Malaysia have decided to work on a 'price discovery mechanism', a new concept where both sides will arrive at an agreeable cost while undertaking road building projects, Roads and Highways Minister Kamal Nath said.

"We have a tie-up based on this concept only with Malaysia, which is renowned for its road construction skills. The price discovery mechanism foresees the two sides working out a mutually agreeable price to undertake the project, Kamal Nath, who signed an emorandum of understanding on road assistance projects with Malaysia on Tuesday evening, said.

He said this new concept was different from the earlier straightforward bidding technique.

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Stressing that the government was all geared to build 20 kms a day of national highways, Kamal Nath noted that growth had preceded infrastructure in India.

"We will have to bridge the deficit," he said, adding that "at the moment we are not building for the future but catching up with the past."

Ties between India and Malaysia have been steadily strengthening and with the visit of Malaysian Premier Najib Razak to India earlier this year and Indian Prime Minister Manmohan Singh's visit to Malaysia in October, the ties have got an extra boost.

"Both the prime ministers want to set up new milestones, new sectors between the two countries," Kamal Nath noted adding that Najib had been present to witness the signing of the MoU on Tuesday.

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He said Malaysia was the only country which had been identified for this pricing concept.

"Malaysia has strength and skills in road sector coupled with Malaysian construction capacity which is what we need in India," he said. The minister said Malaysia was skilled in making roads according to specifications.

"In India we can't have one size fits for all kind of road as building a road say in Kashmir will be different than building in Rajasthan or Maharashtra."

The basket of price discovery mechanism will be worked out by officials from both the countries, he said, adding that the first project would be announced in six months.

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He also clarified that the MoU signed yesterday was not only building a road but also involved landscaping, management, maintenance of highways etc.

He said the funding would be by the Malaysian companies, or on a build operate transfer (BOT) basis or annuity basis (which would be between 16-20 years).

Earlier, top officials of the Malaysian Indian Congress (MIC) called on Kamal Nath and discussed the possibilities of setting up manufacturing units in India for various agri- pharma products like cocoa toothpaste, rubber wood furniture etc.

They also talked about setting up R&D facilities in India.

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Malaysia excels in research and development especially in palm oil. Yesterday, India and Malaysia signed a memorandum of understanding to promote technical assistance services in highway management and development in India.

The MoU is expected to further enhance participation of Malaysian engineering and consultancy companies in the development of national highways in India.

Najib's presence at the signing ceremony underscores the potential for collaboration between the two countries in the economic and commercial areas, particularly in the infrastructure sector, officials said.

Indian officials said the technical assistance would benefit India in view of Malaysia's long experience in implementing road and highway projects.