Following the conclusion of two-day talks between anti-narcotics forces of the two countries, a joint statement said both sides had "agreed to enhance mutual cooperation through effective and sustained steps to control drug trafficking".
The statement did not give details of these steps.
The two countries further agreed to "continue sharing actionable intelligence and adopt a coordinated strategy to prevent cross-border drug trafficking", the statement said.
The MoU on `drug demand reduction and prevention of illicit trafficking in narcotic drugs, psychotropic substances and precursor chemicals and related matters` was signed during the meeting.
The two sides "welcomed this development and agreed that the MoU will provide an institutional mechanism for further promoting bilateral cooperation", the statement said.
This was the eighth round of talks between the heads of Narcotics Control Bureau and Pakistan`s Anti-Narcotics Force.
The Indian delegation was led by NCB Director General O P S Malik and the Pakistan side was headed by ANF Director General Maj Gen Syed Shakeel Hussain.
The talks were held in a "cordial and constructive atmosphere", the statement said.
Both sides "shared the concern of the growing menace of narcotic drugs" but noted that the existing cooperation and information-sharing between the two was "satisfactory", the statement said.
Best practices in counter-drug trafficking and demand reduction were shared by the two sides.
They agreed that talks between the heads of the NCB and ANF will be held annually.
India and Pakistan resumed their peace process earlier this year after a hiatus of over two years in the wake of the 2008 Mumbai terror attacks that were blamed on the Pakistan based Lashkar-e-Taiba.