"The talks were wide-ranging and held in a very warm atmosphere," Singh's spokesman Sanjaya Baru said on Sunday, picking up on the easy relationship between the two leaders of the traditional foes.

The two ran almost half an hour beyond a scheduled two-hour closed-door session after their delegations met, and they emerged smiling for the cameras.

The committee would seek to accelerate bilateral trade and commercial ties, the Press Trust of India (PTI) news agency said.

"We want to promote trade, and any problems that are coming in the way we certainly want to resolve them," the PTI quoted Singh as saying during the talks.

Two-way trade

Two-way trade between India and Pakistan has risen from $161 million in the 2000 fiscal year to $483.85 million in the fiscal year ending on 31 March 2005, with the balance tilted heavily in India's favour.

"We want to promote trade and any problems that are coming in the way we certainly want to resolve them"

Indian Prime Minister
Manmohan Singh

The two men agreed to launch a train service between Munnabao in India's Rajasthan state and Khokrapar in the Pakistani province of Sindh in December, the PTI said.

Indian officials had said New Delhi would propose a raft of proposals, some new, some old, including reuniting families separated by the border dividing Kashmir. 

Singh and Musharraf agreed to increase the frequency of the bus service linking the capitals of the Himalayan region, Srinagar and Muzaffarabad, that was launched on 7 April, official sources said.

An official told reporters the two sides discussed measures to build trust between the two rival armies deployed across the Line of Control (LoC), the de facto border splitting Kashmir between India and Pakistan.

Kashmir has been held in part by each country since independence from Britain in 1947, but claimed in full by both.

Realistic approach

Pakistan Foreign Minister Khurshid Mahmud Kasuri, who accompanied Musharraf to the talks at the Hyderabad guest house, had called on the two countries, ahead of the talks, to take a "realistic approach to resolve all outstanding issues between them".

The insurgency in Kashmir began
in 1989

"We want solutions to all problems between us ... Kashmir is the central issue," the United News of India news agency quoted him as saying.

"The two countries had fought wars over Kashmir and they must now show maturity to resolve their differences," Kasuri added.

India accuses Pakistan of fomenting a rebellion in India-administered Kashmir, a charge Islamabad denies. 

Musharraf, soon after his arrival in India on Saturday, called on the two neighbours to grasp the opportunity afforded by his visit to make headway on Kashmir, the subject of two of the three wars between India and Pakistan since 1947.

Tens of thousands of people have been killed since the beginning of the insurgency in 1989.

India and Pakistan resumed peace talks after being pulled back from the brink of war twice in 2002.