External Affairs Minister Pranab Mukherjee and Singapore Foreign Affairs Minister George Yeo signed the agreement, calling it a 'landmark pact' for a regular forum.
The state government has begun the process to acquire land for the university.
Singapore on Wednesday said it was hopeful that a Free Trade Agreement with India would be signed by the middle of this year.
George Yeo, the second Chancellor of Nalanda University after Nobel Laureate Amartya Sen, on Friday resigned from the post saying the varsity's autonomy was being affected as he was "not even given notice" of the leadership change in the institution.
Nobel laureate Amartya Sen has slammed Prime Minister Narendra Modi, accusing his government of "extraordinarily large" interference in academic institutions.
Nobel Laureate economist Amartya Sen on Tuesday expressed scepticism about Prime Minister Narendra Modi's idea of secularism, asserting he would like to see "more action" in reaching out to the minorities.
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