NEW DELHI, Dec 14: India and Pakistan on Thursday signed a new shipping protocol that would allow ships of the two countries to lift third-country cargo from each other's ports and allows foreign ships also to ply sea trade between the two.

The new agreement, which replaces a 1975 protocol, was signed by Indian Shipping Minister T R Baalu and his Pakistani counterpart Babar Khan Ghauri who described the move as historic.

"Removing these restrictions were under consideration, especially in view of the rising trade between the two countries," an Indian statement said.

Bilateral trade increased to 860 million dollars last year at anannual growth rate of 43 per cent.

Pakistan officials said that private companies had secured licences for a Karachi-Mumbai ferry service. They would now contact the Indian government for its side of the permission.

Mr Ghauri has been quoted as saying that that the ferry service was expected to start from February or March next year.

Cargo charges would considerably decreased after the new shipping protocol.

India-Pakistan technical talks on shipping were held in Karachi in December last year and the new protocol was negotiated by the officials of two sides during this meeting.

"The protocol removes restrictions on lifting of third country cargo by Indian and Pakistani vessels from each others ports," an Indian statement said.

"It also lifts the restriction that the cargo destined for the other country can be carried only by an Indian or Pakistani vessel. Third country flag will be able to carry India- or Pakistan-bound cargo.