New Delhi: India took a step towards ratifying a 41-year-old border dispute with Bangladesh Wednesday that would see thousands of people living in “enclaves” being allowed to choose their nationality.

The enclaves, where pockets of one country's territory are surrounded by the other, are essentially islands of land resulting from ownership arrangements made centuries ago by local princes.

They have survived both the partition of the sub-continent after British rule ended in 1947 and Bangladesh's 1971 independence from Pakistan.

Around 50,000 people are thought to live in the landlocked islands and lack many basic services because they are cut off from their national governments.

On Wednesday, the upper house of India's parliament passed a bill to exchange the enclaves, in a step towards ratifying a land boundary agreement signed between India and Bangladesh in 1974.

“This is an historic situation. We are going to implement the agreement after 41 years. I am happy that everyone supported the bill,” Indian Foreign Minister Sushma Swaraj said.

“We are aware of the complexities involved in implementation of the agreement. The earlier we implement, sooner we reap the benefits,” she was quoted as saying by the Press Trust of India news agency.

There are 162 enclaves, 111 in India and 51 in Bangladesh, with those living there lacking the rights as a citizen of either country.

Under the agreement, which Bangladesh ratified in 1974, the countries will exchange territories in India's north-eastern states Assam, Tripura, Meghalaya and eastern West Bengal.

People living in the enclaves will be allowed to choose to live in India or Bangladesh, with the option of being granted citizenship in the newly designated territories, and the enclaves would effectively cease to exist.

India's lower house of parliament and the four state parliaments affected by the swap must now ratify the bill. India's ruling BJP has a majority in the lower house and the bill is expected to pass easily.