NEW DELHI, Feb 23: Pakistan and India on Wednesday constituted two working sub-groups to facilitate increase in trade and remove barriers for enhancing economic cooperation.

The decision was taken at the end of the two-day meeting of the Joint Study Group which ended here on Wednesday.

A joint statement issued at the end of the meeting said that the recommendations made during the discussions would be presented to their respective governments for consideration under the framework of the composite dialogue.

The groups were called working/sub-groups on customs cooperation and trade facilitation and non-tariff barriers (NTBs). The terms of reference (TOR) for the sub-groups were mutually agreed upon.

The two sides identified issues relating to bilateral trade and deliberated upon the future roadmap in order to enhance trade and economic cooperation. It was also decided to hold the second meeting of the JSG on mutually agreed dates.

Officials said commerce secretaries of India and Pakistan on Wednesday ended their first exploratory talks aimed at preparing the two countries for an untapped bonanza from bilateral, but doubts would shroud business ties if palpable progress was lacking in the political dialogue, officials said.

"We have had very good interactions...The news is that we have had these discussions," Pakistan's Commerce Secretary Tasneem Noorani told reporters at the end of two days of talks with Indian counterpart S.N. Menon. "But trade is part of the overall dialogue that is going on between our countries," he added.

He said much as trade and commerce was highly desirable between India and Pakistan, it could only progress in tandem with the other issues in the composite dialogue.

Pakistan's High Commissioner to India Aziz Ahmed Khan said there had been a fillip to the political dialogue with the recent visit to Islamabad by Indian Foreign Minister Kunwar Natwar Singh.

Mr Noorani said the Joint Study Group to explore trade prospects was set up at the behest of the two foreign ministers to take the trade forward between the two countries by removing bureaucratic and other obstacles.

One of these obstacles was the issue of non-tariff barriers and para-tariff obstacles. While these were discussed in considerable depth, India's quest to get Pakistan to grant it MFN status was left out because that was a political issue, and therefore part of the composite dialogue.

India wants transit rights through Pakistan to Afghanistan, but that too would be cleared at the political level. Even though there was no bilateral trade agreement, trade between India and Pakistan had been showing a satisfactory rate of increase over the past few years, while the growth had been particularly robust during the current financial year.

India's exports to Pakistan during April-September 2004 had gone up by 256 per cent, having increased to US $ 246.32 million from US $ 69.16 million in the corresponding period of 2003-04.

The joint statement said: The first meeting of the India-Pakistan Joint Study Group (JSG) on Trade and Economic Cooperation was held on Feb 22-23, 2005. The Indian delegation was led by Mr S.N. Menon, Commerce Secretary of India and the Pakistani delegation was led by Mr Tasneem Noorani, Commerce Secretary of Pakistan. The talks were held in a cordial and constructive atmosphere.