India and Pakistan have reaffirmed their commitment to peace, but made no apparent progress on the key Kashmir issue after two days of talks in Delhi.
India has rejected a demand to pull out troops from Kashmir
Both sides agreed not to build any new defence posts along the Line of Control (LoC) which divides disputed Kashmir.
Transport links are also to be strengthened, with a second cross-Kashmir bus route.
The BBC's Sanjeev Srivastava says ties have improved, but the major challenges of the peace process still lie ahead.
The talks in India's capital were aimed at settling long-standing differences between the nuclear rivals.
Peace moves between the nations - who have fought three wars since 1947 - began two years ago but have slowed in recent months.
Speaking after the talks, Indian foreign secretary Shyam Saran and his Pakistani counterpart Riaz Mohammed Khan said the two sides hoped to open a new bus route by March or April.
The service would link the towns of Poonch in Indian-administered Kashmir and Rawalakot on the Pakistani side of the LoC. The first such route, joining Srinagar and Muzaffarabad, opened last year.
Consulates in Karachi and Mumbai (Bombay) will reopen shortly and agreements which will reduce the risk of nuclear accidents should soon be finalised, the two men said.
Discussions are also to be held on opening two more designated meeting points on the LoC. Five such points were set up to help people in the wake of the 8 October earthquake.
Our correspondent says there is no question that the two countries have made good progress - there is no more talk of war.
The toughest negotiations still lie ahead
However, in the context of the continuing peace process, agreeing on these confidence-building measures was perhaps the easier part, he says.
The road ahead is likely to be much more tedious as neither side really has a mutually acceptable road map on Kashmir, our correspondent adds.
Any redrawing of boundaries is not acceptable to Delhi, while the present LoC is not acceptable to Islamabad.
Mr Khan said the talks had been friendly, but the future was "challenging".
"There have to be purposeful discussions for a peaceful and final negotiated settlement. We should start resolving the problem now," he told a joint news conference.
Even while acknowledging the steps made, Mr Saran accused Islamabad of not doing enough to prevent militants entering Indian-administered Kashmir.
"There should be a serious attempt from Pakistan to bring terrorism under control," he said, warning any attacks on India could affect the peace process.
Earlier this month, Pakistani President Pervez Musharraf called for a pull-out of Indian army troops from three cities in Indian-administered Kashmir.
While the proposal received some support in Kashmir, it was rejected by India which says it needs the troops to fight armed militants.
There has also been a sharp exchange between both countries over unrest in the Pakistani province of Balochistan.