Modi will be in Champaran, Bihar to flag off several development projects. [File photo]Reuters

Prime Minister Narendra Modi will on Friday initiate work on Nepal's biggest hydroelectric project, being built by an Indian company, as he seeks to regain ground in the Himalayan republic where China has made deep inroads.

India has an open border with Nepal and tens of thousands of Nepalis work in India. The neighbors share close religious and cultural bonds.

But India has been slow to implement projects despite ambitious plans, and it has also often been a target of Nepali politicians critical of what they see as meddling by their overweening, much bigger neighbor.

China, on the other hand, is pouring aid and investment into hospitals, roads, and hydroelectric plants.

Modi, who began a visit to Nepal on Friday, will, with his counterpart K.P.Sharma Oli, lay a foundation of the 900 MW hydro-power project through remote control from Kathmandu.

"As Nepal enters a new era of consolidating the gains of a democracy and achieving economic growth, India remains a steadfast partner," Modi said on Twitter before seeing out on his visit.

The hydro project, which is expected to cost $1.04 billion and is being built by state-run Indian firm Satluj Jal Vidyut Nigam (SJVN) Limited, will be the single biggest foreign investment project in cash-strapped Nepal.

Project officials say they are in final stages of agreement with the State Bank of India for investment of about 36 billion Indian rupees ($535 million), with the rest coming from equity investment by SJVN.

The project is moving forwards just as a Chinese proposal to build a 750 MW power plant in west Nepal has run into a roadblock. China's Three Gorges International Corp is haggling for better terms, Nepali officials said.

Modi is visiting for the first time since protests for a greater say in government by ethnic Madhesis, in Nepal's lowland south, led to the closure of the border for months in 2015 and 2016.

The blockade choked off Nepal's imports of fuel, medicine and construction material just as it was struggling to recover from the worst earthquake on record in which 9,000 people were killed.

Many in Nepal saw India's hand in the protests although India denied that.

Guna Raj Luintel, editor of the Nagarik daily, said there was lingering anger towards India over the blockade.

"Modi is under pressure to bring the Nepal ties back to normal and win the confidence of the Nepali people," Luintel told Reuters.

After arriving in Nepal, Modi offered prayers at a Hindu temple in the border town of Janakpur, which was a hub of the Madhesi protests in which more than 50 people were killed.