India has reacted cautiously to proposals from Pakistan aimed at reducing tensions between the two countries.
Violence continues to rage in Kashmir despite peace moves
A statement from Delhi welcomed Islamabad's decision to ease trade restrictions and restore travel and sporting links.
But the Indian Government repeated demands that Pakistan do more to end what it calls cross-border terrorism in Kashmir.
At least 28 people have been killed in the disputed territory since Tuesday evening, ahead of a key visit to the region by a US envoy.
US Deputy Secretary of State Richard Armitage arrived in Islamabad on Wednesday evening, where he will hold crucial peace talks, before meeting Indian officials in Delhi.
Pakistan's announcement on Tuesday was the latest in a series of moves by both countries.
The Pakistani prime minister also said Pakistan would seek to restart talks with India over the two countries' nuclear weapons.
Last week, India said it would restore full diplomatic ties and air links with its rival.
Talking is key
On Wednesday, a statement from the Indian External Affairs Ministry said moves were underway to reappoint a high commissioner to Pakistan.
And it welcomed the news that Indian fishermen, arrested in Pakistani waters, were to be released.
But it said India would consider other suggestions on closer diplomatic ties only once there was evidence that Pakistan was taking firm and credible action against cross-border militancy.
"It is quite clear that several specific steps would need to be taken by Pakistan to move this process meaningfully forward," foreign ministry spokesman Navtej Sarna told reporters.
The BBC's Adam Mynott in Delhi says this was another step forward in three weeks of cautious diplomacy.
But he says for two countries who almost went to war last year, it is the process of gradually improving ties which is more important than the outcome.
There has been an upsurge of violence in recent weeks in Kashmir, just as relations between India and Pakistan have been thawing.
The authorities in Indian-administered Kashmir say at least 21 people have been killed in clashes between suspected militants and security forces in the last 24 hours.
Kashmiris pray for an end to years of war
Two Indian soldiers and two suspected militants died in a fierce gunfight in the northern Rafiabad area, officials said.
And troops killed a further five gunmen in a separate clash near the frontier area of Yusmarg.
Another nine suspected militants, two soldiers and a civilian also died in separate incidents of violence across the state.
On the other side of the Line of Control dividing Kashmir, seven people, two of them soldiers, were killed by Indian shelling, Pakistani officials said.
The visit of US Deputy Secretary of State Richard Armitage has sparked off speculation in South Asia that the US might have drawn up peace proposals for Kashmir, rather like its Middle East roadmap.
But the US envoy told the BBC on Wednesday before leaving for the region that he was travelling with no such concrete peace proposals.
He said the dispute over Kashmir was very worrisome - but less so than it had been a year ago, when the two sides nearly went to war.
However, referring to the general diplomatic situation, Mr Armitage said: "We're in a much better place."
Mr Armitage will also visit Afghanistan later in the week.