The new "trilateral highway" is aimed at creating a new economic zone ranging from Calcutta on the Bay of Bengal to Ho Chi Minh City on the South China Sea.

The first phase of the project was agreed during Indian prime minister Dr Manmohan Singh's visit to Burma this week when he and President Thein Sein set a 2016 deadline to complete a super highway linking Guwahati in Assam to Burma's border with Thailand via Mandalay and the former capital Rangoon.

According to analysts, the road is a key part of a plan to open the "Mekong-India Corridor" to link the world's second fastest growing market – India – with the new Asian Tiger economies of Indo-China.

Until now plans to open this new economic zone, which bypasses China, the world's fastest growing economy and superpower, have been hampered by international sanctions against the former military regime in Burma.

But with the gradual easing of sanctions following the series of democratic reforms unveiled by Burma's president Thein Sein since last August, the obstacles have now cleared.

For India, the new highway will open up new oil and gas opportunities off the coast of Burma, and also Vietnam, as well as easier access to Japanese products made in Thailand.

It would also bring new wealth to its poor and marginalised North-Eastern states like Manipur and Nagaland, which have been blighted by local insurgencies and heavy security.

The highway will also recall the historic ties between India and Burma which unravelled following their independence from Britain after the Second World War.

During most of the colonial period Burma was governed as a province of British India from Calcutta and later New Delhi. Aung San Suu Kyi, like other children of Burma's elite, was a pupil and university student in India.

Mohan Guruswamy of the New Delh-based Centre for Policy Alternatives, said a two lane highway connecting the Indian border to Mandalay, 375 miles away, had already been built, and the next phases will be to broaden it to a four-lane road and extend it a further 375 miles to Rangoon.

"The idea is that you can get in a car or bus and drive to Bangkok from Guwahati. Burma was the hurdle, but now it has opened up, thanks to the Americans. It marks a great opening of a new economic zone," he said.