The Prime Minister also thanked the visiting Saudi dignitary for taking good care of Indian haj pilgrims and the two million Indians staying in that country.
"The Prime Minister and the Saudi Crown Prince discussed trade, investment, terrorism and security situation in West Asia and Afghanistan," the PMO said.
It said the Prime Minister conveyed to the Crown Prince that "India has a special and warm relationship with Saudi Arabia which we accord high importance."
The pact was signed following talks between Saudi Arabia's Crown Prince Salman bin Abdulaziz Al Saud and Vice President Hamid Ansari during which a range of bilateral, regional and international issues figured.
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The defence cooperation pact will allow exchange of defence-related information, military training and education as well as cooperation in areas varying from hydrography and security to logistics.
It is highest level political visit to India from Saudi Arabia after the landmark visit of King Abdullah bin Abdulaziz Al Saud in January 2006.
Saud also met External Affairs Minister Salman Khurshid.