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Last Updated: Tuesday, 22 February, 2005, 11:25 GMT
India-Pakistan trade talks begin
Cargo ship
Trade between India and Pakistan is almost negligible
Commerce secretaries from India and Pakistan have begun two days of trade talks in the Indian capital Delhi.

The aim of the talks is to improve business and trade links.

They follow an agreement last week between the two countries to launch a direct bus route between Indian and Pakistani-administered Kashmir.

The talks are taking place as the Pakistani prime minister is on his way to Iran to discuss a $1bn (523m) gas pipeline project.

'Eliminate bottlenecks'

Correspondents say that direct trade between India and Pakistan is only worth about $300m - a tiny amount compared to their combined $200bn trade with the rest of the world.

The two days of meetings are the first held by a Joint Study Group (JSG) set up to stimulate economic co-operation between the two countries.

Iranian Foreign Minister Kamal  Kharrazi (L) in Delhi
Iran is also discussing oil with India

"This JSG will further strengthen our resolve towards peace, prosperity and commitment for a better tomorrow in this subcontinent, which we share," Indian Commerce and Industry Minister Kamal Nath said.

"The JSG will have to consider positive steps that need to be taken towards expanding our trade. We have to identify bottlenecks and eliminate them.

"Given the right flexibilities, there is potential for our trade to grow five-fold within a couple of years."

'Benefit India'

Correspondents say that huge potential for trade between the two countries, whose relations have improved since they nearly went to war in 2002.

As the meeting took place, the Pakistani Prime Minister Saukat Aziz left for Iran to discuss a proposed gas pipeline project.

Mr Aziz said that he expected "substantial progress" in the talks.

"The gas pipeline project, increasing economic and trade ties and expanding our bilateral ties will be the major areas of discussion during talks with the Iranian leadership," he said prior to his departure.

Our effort is that Iran, Pakistan and India should take this project forward. Our energy needs are increasing and if we get gas from abroad, it will benefit the economy
Pakistani Prime Minister Saukat Aziz

Mr Aziz said that the project would bring Pakistan and Iran closer, and could also benefit India.

"The three countries can create a situation where it is beneficial to the economies of the three ," he said.

He said that his discussions would also cover transit routes and rail, road and air links as "to build a new basis for expanding our ties".

The talks in Iran coincide with a visit by the Iranian Foreign Minister Kamal Kharrazi to Delhi for the eighth meeting of the Indo-Iran joint business council.

He has signed a memorandum of understanding for the project dubbed "the peace pipeline", involving Iran, Pakistan and India.

India says that under the terms of the deal, a technical team from the petroleum ministry will visit Iran later this month to discuss the gas pipeline project.

Mr Kharrazi announced a three year multiple visa facility for all Indian investors who could also be eligible for a long term stay permit.

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