NEW DELHI, June 9: India said on Sunday it was ready to announce steps to de-escalate tension with Pakistan, even as its soldiers killed two suspected Al Qaeda fighters in Kashmir to mark what could be a new phase in the crisis.

A senior government source told AFP New Delhi would within days take a number of steps to cool the heated standoff between the two countries.

The government source said a “menu” of options was available to New Delhi in its bid to ease tension.

These included increasing India’s diplomatic representation in Islamabad, lifting a ban on Pakistani aircraft from using Indian airspace and restoring bus and train links.

The source, speaking on condition of anonymity, declined to say when India was likely to announce the measures but added, “It is fair to estimate that it will be before (US Defence Secretary Donald) Rumsfeld’s arrival,” scheduled for late Tuesday in New Delhi.

US Deputy Secretary of State Richard Armitage had announced in Estonia late Saturday that India had pledged to make “military gestures” and take diplomatic action to ease tensions with Pakistan.

These would be as a gesture of goodwill after Musharraf gave a commitment to Armitage he would “permanently” end attacks by militants on Indian targets.

The government source told AFP, however, it was not likely any military de-escalation would take place until Musharraf’s pledges have been verified on the ground.

Indian troops stationed on borders with Pakistan would not be demobilised until after the holding of scheduled elections in occupied Kashmir in September or October.

“We cannot trust President Musharraf entirely, but we are willing to give this chance,” the government source said, referring to the Pakistan president’s assurances to Armitage.

However, there appeared no reduction of tension on the ground in Kashmir, where police said Indian and Pakistani troops traded heavy artillery fire, injuring three Indian soldiers, two policeman and four civilians and damaging a state-owned television tower.

Indian soldiers also engaged a group of what are believed to be heavily-armed Al Qaeda fighters in the far north of the disputed state, killing two of them, a defence ministry source told AFP.

The “Arab-looking” fighters were encountered by an Indian military patrol in occupied Kashmir’s volatile Drass sector, the source said.

If confirmed, the incident will mark the first time Al Qaeda members are known to have infiltrated occupied Kashmir.

Army sources last week said they believed large numbers of Al Qaeda and Taliban fighters had fled Afghanistan and had regrouped in Azad Kashmir to launch strikes on Indian targets.

A powerful alliance of Kashmiri fighters however denied any Al Qaeda member had joined their “freedom struggle”.

“The Indian claim is totally baseless and a pack of lies. It is yet another vain attempt to mislead the international community,” said Syed Salahuddin, chairman of the Muttahida Jihad Council.

“No Arab or Al Qaeda member is fighting along with any of the Mujahedin groups to end the illegal Indian rule in occupied Kashmir,” he told AFP.

Further raising temperatures in Kashmir was the arrest early Sunday by Indian security forces of a leading figure.

Syed Ali Geelani, an executive member of the All-Party Hurriyat Conference, was sent to a jail in eastern India on allegations he has funded militants in the disputed territory.

The Hurriyat alliance said the arrest was designed to “pour cold water” on international efforts to calm passions in the region.

The alliance called for a general strike on Tuesday to protest the arrest. —AFP