"We are looking forward to maybe a slow movement upwards, nevertheless a very definite movement towards having a summit between the two (leaders)," he said at the end of the two-day annual Asia Security Conference in Singapore.

"So it's something very, very positive that is happening in the subcontinent."

Fernandes said that following Prime Minister Atal Behari Vajpayee's "last effort" to repair damaged ties with Pakistan, there has been a "positive response" from Islamabad and in the international community.

The latest development is a visit by a group of Pakistani MPs to India and a planned reciprocal trip by Indian parliamentarian to Pakistan.

Business executives have also started interacting and the media on both sides have been supportive, he said.

"We are currently in the process of confidence-building," Fernandes said.

In April, Vajpayee offered a "hand of friendship" to Pakistan ending a 17-month deadlock following a militant attack on the Indian parliament in 2001.

The two nations have since reappointed their ambassadors and are discussing ways to revive air, bus and train links which were cut after the parliament attack.

On Saturday, US Deputy Defence Secretary Paul Wolfowitz said Washington was "very pleased" with warming relations between the nuclear rivals.

Wolfowitz met Fernandes on the sidelines of the conference on Saturday.

AP adds: Both countries are pursuing a number of "confidence building measures," such as restoring diplomatic ties and direct travel with each other, in the hope that it will ultimately lead to a summit where their leaders can resolve their differences, Fernandes' secretary C.K. Mishra said, explaining his boss's comment.

"No dates have been set and nothing has been discussed, but if there is a summit, yes, of course, it will be between the leaders of India and Pakistan," Mishra said.

Fernandes' comment came after his ministry repeated warnings in its annual report on Friday that it was concerned that Islamic hardline groups in Pakistan may gain access to weapons of mass destruction.

India and Pakistan have fought two wars over the Himalayan territory since they won independence from Britain in 1947. India accuses Pakistan of training and arming the militants - a charge denied by Islamabad.

The two sides nearly started a third war after Islamic militants attacked India's Parliament in December, 2001. Intense lobbying from Washington and other nations led to both sides backing down.

"The situation on the Indian subcontinent has radically altered... There is a new sentiment to Jammu and Kashmir," Fernandes said.

Another AFP report says, India and China are moving to raise trade and defence ties to a higher level, Indian Defence Minister George Fernandes said Sunday.

The two Asian giants share similar problems and are at about the same level of economic development, he said.

"There are efforts made on both sides to see that our relations... are raised to a higher level," he told reporters at the end of an Asia Pacific conference of defence ministers here.

In the past four to five years, two-way trade has expanded to reach five billion dollars, he said, growing from just a few hundred million dollars in the 1990s.

Both countries are also expanding an exchange program involving military officers to be posted for training in each other's institutions in order to increase the level of confidence-building, he said.

Asked about the future of India-China defence ties, he said: "We would like to build a very close relationship but that will take time."

Fernandes visited China in April in the first trip by an Indian defence minister since 1992.

India and China fought a brief but bitter border war in 1962 and have since shared an uneasy relationship of mutual distrust. The two countries are trying to resolve territorial disputes.

Ties began warming when then Chinese prime minister Zhu Rongji visited India in January last year.

Fernandes caused a diplomatic storm in 1998 when he suggested that China, not arch-rival Pakistan, was the cause of concern that led India to develop nuclear weapons.