A Pakistani Ranger (L) and an Indian Border Security officer perform a ceremony at the Wagah border checkpost at a flag raising ceremony. (ARIF ALI - AFP/Getty Images).

India and Pakistan on Thursday agreed to explore the possibility of a preferential trade deal, relax curbs on investment and banking and ease the rules for issuing business visas, the Times of India reports

The agreement was formed at a two-day meeting between commerce secretaries of the two nations, held in Islamabad.

Pakistan stopped short of offering India most-favored nation status, the paper said, but Islamabad did recognize that a move of that nature would help boost bilateral trade -- and, ostensibly, improve diplomatic relations. One key decision was to change the "positive list" of items where trade is allowed to a "negative list" of banned items, which would free up many new areas of commerce.

It was also significant that the official minutes of the meeting mentioned the possible relaxation of investment and banking restrictions, as India currently does not allow investment by companies from across the border and also bars Pakistani banks from operating in India due to suspicions of possible links with terrorist groups.

According to Reuters, one of the main thrusts of the meeting was a statement of intent on the trade in fuel and electricity, which India is keen to export to Pakistan. The joint statement said two groups of experts would be set up in the next two months to examine how to initiate and expand trade in all types of petroleum products and study feasibility of electricity trade, the news agency reported. 

Indian exported $1.2 billion in goods to Pakistan, while Pakistan exported about $270 million in goods to India last year, while the unregulated and illegal trade, often routed through Dubai and Singapore, is estimated at between $2 billion and $2.5 billion, Reuters said.

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