The foreign ministers of India and Pakistan have met on the sidelines of a regional summit, in a further effort to lay the foundations for a peace deal.
Both sides are trying to build confidence before tackling the Kashmir dispute
Officials say they discussed the contentious Kashmir issue as well as a proposed bus service linking Indian and Pakistani Kashmir.
On Tuesday, Pakistani Prime Minister Chaudhry Shujaat Hussain vowed to pursue peace with India.
Ties between them have been improving steadily in the past six months.
Indian Foreign Minister Natwar Singh met his Pakistani counterpart Khursheed Mahmud Kasuri for a meeting over breakfast in the Pakistani capital that lasted 75 minutes.
The two sides described their talks as "frank and friendly".
"We discussed all issues between India and Pakistan, including that of Jammu and Kashmir," Mr Kasuri told journalists.
It was their third meeting since the new Indian Government took over in May.
Formal talks between the two men are scheduled for September and analysts say these meetings are aimed at building trust.
Among the proposals discussed between the foreign ministers on Wednesday was a plan to link the capitals of Indian and Pakistani Kashmir by bus.
"We also discussed cross-border terrorism and the infiltration issue with Pakistan," Mr Singh said, referring to the movement of Kashmiri militants across the Line of Control that divides the two sides.
India and Pakistan have fought two wars over Kashmir since 1947
On Tuesday Prime Minister Hussain told foreign ministers from the seven-nation South Asian Association for Regional Cooperation (Saarc) that Pakistan was pursuing efforts to resolve all disputes with India - including the contentious Kashmir issue, which has soured relations for nearly 60 years.
"I want to assure all members of Saarc and indeed the world that Pakistan is committed to pursuing peace with India," he said.
Peace talks between the two countries began earlier this year after months of hostility.
Six more rounds of talks are planned over the next month and a half.