The move to resume diplomatic ties and air links signals a thaw in relations between India and Pakistan after a 16-month stand-off.
It caps a week of reconciliatory moves by both sides, in what appear to be tentative steps towards peace talks.
Behind-the-scenes activity in both capitals suggest that both countries are keen to take steps to resolve some of their differences.
There has been a sudden increase in attacks in Kashmir
|
But a sharp increase in violence in Indian-administered Kashmir in recent weeks has made it clear that no real breakthrough is likely without movement on their differences over that dispute.
Kashmir has dominated relations between the two nuclear neighbours for more than 50 years and has the potential to wreck any peace initiative.
Attacks by Kashmiri separatists have derailed relations between the two countries more than once.
US pressure
It is not clear what has led to the recent moves by both sides although it appears likely that recent events in Iraq have had an impact.
 |
Some observers believe that the US success in Iraq has sent a strong signal to India and Pakistan
|
Many believe that pressure is being applied by the United States to push the two leaders to engage each other.
The sudden move to try and begin a dialogue comes as US Deputy Secretary of State Richard Armitage is preparing to visit India and Pakistan.
Richard Armitage is due in the region next week
|
Pressure is particularly strong on Pakistan, with Islamabad being pressed to rein in militants crossing over into Indian-administered Kashmir from Pakistan-controlled territory.
Recent attacks in Kashmir have been blamed on front-organisations of groups such as the Lashkar-e-Toiba and the Jaish-e-Mohammad, both banned after appearing on a US State Department terror list.
Some observers believe that the US success in Iraq has sent a strong signal to India and Pakistan.
In a recent BBC interview, Kashmiri politician and India's former junior foreign minister, Omer Abdullah, said that the US action in Iraq had cast its shadow on South Asia.
It was imperative for Delhi and Islamabad to sort out their own differences, he said, or face the danger of Washington setting the agenda on its terms - something which would be unpalatable to both countries.
Despite this, Indian Prime Minister Atal Behari Vajpayee is unlikely to go to Pakistan soon - in fact, it appears likely that talks will begin at the level of foreign ministry officials before a meeting between heads of government.
The Indians are particularly wary after two earlier failed attempts.
While Mr Vajpayee was in Lahore in 1999, India believes the Pakistan army was planning what became known as the Kargil conflict, when Pakistani troops and militants took over land across the Line of Control in Kashmir.
In 2001, a summit between General Pervez Musharraf and Mr Vajpayee in Agra collapsed without any breakthrough, leading to public criticism in India.
With general elections scheduled in India next year, Mr Vajpayee will want to limit any possible political damage if talks fail again.
Significantly, ahead of Friday's announcement he met leaders of the hardline Hindu organisation, the RSS, and succeeded in getting them to endorse his initiative.
Kashmir violence
Recent attacks in Kashmir have also shown that the key to any progress lies there.
It is difficult for Islamabad to control the militants
|
Mr Vajpayee's visit was followed by a sudden upsurge in separatist violence, in sharp contrast to the relative peace of recent months.
Kashmir watchers say the attacks are being carried out by groups over which the Pakistani authorities have little control.
With a major power struggle on within the main Kashmiri militant group, the Hizbul Mujahideen, the field has been left open to other players, many of them with suspected ties to al-Qaeda and other pan-Islamic groups.
Kashmiri journalist Muzamil Jaleel says these groups have little interest in peace as they see their struggle in Kashmir as part of a global pan-Islamic movement.
The violence makes it difficult for the Indian prime minister to reign in hardline opinion in his country.
Similarly, Pakistan cannot afford to be seen to be giving up its ideological support for the separatists, especially with the presence of hardline Islamic parties in its parliament.
For any dialogue to be remotely successful, the leadership in the two countries will have to carefully balance domestic pressures with the international push for peace.