The issue was discussed at a meeting between a visiting trade delegation from Pakistan's Karachi Chamber of Commerce and Industry and India's commerce and industry minister Arun Jaitley, the Press Trust of India news agency reported.

"There has been a spurt of delegations from Pakistan. These are positive steps, directional, and would promote bilateral trade and joint ventures in the long run," Jaitley later told reporters.

"India-Pakistan trade figures presently are not reflective of their potential. I feel it should also grow with the easing of tensions," the minister said.

A series of Indian and Pakistani trade delegations have traveled to each other's countries after a thaw in relations which began with Prime Minister Atal Behari Vajpayee extending a hand of friendship to Pakistan on April 18.

Bilateral ties had plunged to an all-time low in 2002 with both sides teetering on the brink of war.

On Thursday, Jaitely said an agreement among South Asian countries to create a free trade area in the region augured well for an increase in India-Pakistan trade.

India could become a hub for small car exports and Pakistan offered a huge market, he said.

The commerce minister said there was immense scope for cooperation in sectors like tea, entertainment, healthcare, IT and pharmaceuticals from India and cotton, power and textiles from Pakistan.

The visiting Pakistani delegation sought relaxation in visa rules for business visitors from Pakistan and expressed interest in setting up joint ventures.

Annual trade between India and Pakistan is currently valued at 206 million dollars, but could easily jump to three to four billion dollars, if they open up their markets to each other, economists say.

Pakistan's imports from India in the financial year ended March 2001 were 186 million dollars, while India's imports from Pakistan stood at 60 million dollars.