French President Emmanuel Macron has sought "forgiveness" for France’s colonisation of Madagascar, starting with the return of looted cultural artefacts, as a goodwill gesture.

The French president who is on a two-day visit to the Indian ocean island nation, also announced plans to step up economic ties, including investment in a major hydroelectric dam project.

Our presence here is not innocent, and our history has been written... with deeply painful pages," Macron said during a remembrance ceremony at the former royal palace in the capital Antananarivo on Thursday.

"Only you can make this journey of forgiveness," he said after touring the palace with Princess Fenosoa Ralandison Ratsimamanga.

"But we are creating the conditions for it, by making it possible... to mourn what is no longer."

Madagascar was under French colonial rule from 1896 until 1960, when it gained full independence.

Macron confirmed plans to return cultural items taken during colonisation, including the skull of King Toera – who was decapitated by French troops in 1897 and whose remains were taken to France as a trophy.

"These human remains belong here and nowhere else," he said.

It had already been agreed on 2 April that France would return the skulls of three Malagasy warriors killed during the colonial period and held in the Musée de l'Homme in Paris. Their return is scheduled for August.

The French head of state called for a collaboration between historians from both countries so that "truth, memory, history and reconciliation can see the light of day".

The proposal is modelled on historian commissions set up with other territories colonised by France, such as Cameroon, Algeria, Senegal and Haiti.

The first official trip by a French president in 20 years is intended to strengthen bilateral ties and consolidate France's presence in the Indian Ocean despite ongoing colonial-era disputes.

Macron announced after talks with President Andry Rajoelina that several agreements had been concluded during the visit, covering energy, digital technology, infrastructure and tourism.

They include a major agreement for French electricity giant EDF to acquire a stake in a hydroelectric dam project estimated at between $600 and $800 million with Madagascar's hydroelectric company, CGHV.

The Volobe dam is set to be built near the island's east coast, 350 kilometres (217 miles) from the capital Antananarivo, with an estimated electrical capacity of over 120 megawatts.

It should provide "access to electricity for almost 2 million people", according to a statement from the French presidency.

Macron further called for a "partnership" between the two nations over strategic rare earth minerals needed for renewable energies, of which Madagascar has extensive reserves.

His trip comes with France facing challenges to its sovereignty of some of its Indian Ocean territories and the growing ambitions of China and Russia in the region.

Madagascar, a French-speaking island of 30 million people, disputes France's ownership of several small islets nearby called the Scattered Islands that stayed under French rule when its other African colonies became independent.