The visit is likely to take place in the third or fourth week of November, although neither government has confirmed the dates.
Some reports have suggested November 23-25, but officials in Kathmandu said the schedule was still being finalised. "The dates have yet to be finalised," a high-level diplomatic source told The Kathmandu Post.
Shah is expected to remain in New Delhi and hold delegation-level discussions with Modi, besides meeting senior Indian ministers. Several agreements and memorandums of understanding are being considered.
The visit would mark Shah's first bilateral foreign trip, although he travelled to New York in September to attend the United Nations General Assembly.
India first, in contrast to Bangladesh's China outreach
Shah's decision to make India his first bilateral destination follows a long-standing practice among Nepali prime ministers, though there have been exceptions.
It also presents a contrast with Bangladesh's recent diplomatic outreach towards Beijing, with its Prime Minister Tarique Rahman choosing China rather than India for an early bilateral visit.
The proposed visit comes after Shah initially maintained a reserved approach towards foreign diplomats, including representatives from India and China.
PM Modi had invited Shah to visit India soon after he was sworn in.
Infrastructure and hydropower projects on agenda
According to The Kathmandu Post, officials from both countries have exchanged lists of projects that could be inaugurated or launched during the visit.
These include the India-funded Nepal Police Academy in Panauti, the Bhairahawa integrated check post near the Uttar Pradesh border, and bridges in Darchula district and across the Mahakali River.
The two leaders could also launch construction of the Dodhara Chandani integrated check post, the Lower Arun hydropower project and the Siliguri-Jhapa petroleum pipeline.
Hydropower cooperation is expected to feature prominently, including discussions on the 750 MW West Seti, 480 MW Phukot Karnali and 450 MW Seti River-6 projects involving India's NHPC.
Other proposals include an Ayodhya-Janakpur railway connection, a Koshi River project and Indian assistance for Nepal's artificial intelligence ambitions.
Border disputes remain a challenge
Despite expanding economic cooperation, India and Nepal continue to disagree over several issues, particularly the Kalapani-Lipulekh territorial dispute.
"There are some serious and thorny issues which need to be discussed with Indians, like boundary, air routes for Nepal via India, trade imbalance, among others," a senior Nepali foreign ministry official told The Kathmandu Post.
Transit arrangements and the long-pending Pancheshwar Multipurpose Project could also come up during discussions.
The visit follows India's assistance to Nepal after devastating floods in August and a June trip to New Delhi by Rabi Lamichhane, president of Nepal's ruling Rastriya Swatantra Party.
Lamichhane received a ceremonial welcome at the BJP headquarters and met senior party leaders.