Islamabad, March 29:

Nuclear-armed rivals Pakistan and India on Wednesday agreed to boost economic and commercial cooperation as part of their two-year-old peace process, a joint statement said. “The talks were held in a cordial and constructive atmosphere,” the statement issued by Pakistan’s foreign ministry said after the two-day meeting between Pakistani and Indian commerce secretaries.

The South Asian neighbours agreed to sign a new shipping agreement in the “near future” and said they would push forward talks on an agreement to regulate air services.

Pakistan and India also agreed to other steps such as opening bank branches, easing the import of tea from India and removing problems with goods trains between the two countries. Indian has granted Pakistan the status of Most Favoured Nation. But Pakistan has not reciprocated so far, saying India must first remove non-tariff barriers and the two countries must make progress on the slow-moving peace process.

The nuclear-armed neighbours launched a peace bid two years ago which has so far yielded increased transport links but has not yet made headway on what Pakistan says is the key issue of Kashmir.

Indian prime minister Manmohan Singh on Friday offered a ‘treaty of peace, security and friendship’ to Pakistan in a bid to shunt the process forward and build a more solid foundation for the process.