Indian Prime Minister Atal Behari Vajpayee has sent a reply to his Pakistan counterpart Mir Zafarullah Khan Jamali's formal letter on Saturday inviting him to visit Islamabad.

Vajpayee's reply Saturday night signaled India is not rushing into talks with Jamali immediately.

The Indian prime minister in his letter told Jamali that careful preparation must precede a summitlevel dialogue between the two countries. Vajpayee also stressed that a conducive atmosphere for dialogue required an end to crossborder terrorism and dismantling of terrorist infrastructure.

Regarding Jamali's invitation to Vajpayee to visit Pakistan, the Indian prime minister had told parliament of his telephonic talk

with the Pakistan premier last Monday. "Pakistan's prime minister has invited me. I did not accept it. I don't want to say anything further."

Apparently, Vajpayee has neither accepted nor rejected the invitation from Jamali.

According to highly-placed sources, India was willing to make official-level contact with Pakistan on talks but an interaction at the highest level was right now out of the view. India, they said, would prefer to go in a cautious and step-by-step manner.

Within hours of receiving Jamali's formal letter, Vajpayee wrote back reiterating India's commitment to improving ties with Pakistan and hoped Islamabad would respond positively to his announcement of his decision to send back the Indian high commissioner to Pakistan

capital and reviving air links on reciprocal basis.

The Indian premier pointed out that following his telephonic talk with Jamali, he had announced in parliament that India would appoint a new high commissioner to Islamabad and resume civil aviation links with Pakistan.

Reciprocating Delhi's gesture, Pakistan also decided to resume full diplomatic ties with India.

"A decision was taken in the foreign office on Saturday to restore diplomatic ties at high commissioner (ambassador) level," a government spokesman told a news agency in Islamabad yesterday.

He said a formal announcement would be made early this week.

Jamali summoned ruling and opposition parties to devise a joint strategy for a possible dialogue

with arch-rival India, he told a rally in Pakistan.

Meanwhile, analysts in Delhi have noted Pakistan Foreign Minister Khursheed Karuri's remark in an interview to BBC that his country was ready to discuss trade and other bilateral issues with India ahead of the Kashmir issue.

Kasuri is also reported to have said his country is willing to talk to India on a gas pipeline in which Pakistan, Afghanistan, Turkmenistan and Iran are already involved. In a bid to assure India, he said Pakistan would give its own guarantee and international guarantee for the safety of these pipelines.

India has so far had strong reservations about any overland a a « pipeline from Iran passing through Pakistan on security grounds.

Federation of Indian Chambers of Commerce and Industry estimates a huge potential of India-Pakistan bilateral trade. Indo-Pak official trade in 2001-2 stood at 204 million dollars and unofficially the figure is put five to six times more than that. India has granted Most Favoured Nation (MFN) status to Pakistan but Islamabad has not reciprocated.

India has indicated that resumption of bilateral dialogue will be easier if Pakistan takes concrete steps towards trade liberalisation under South Asian Preferential Trading Arrangement (SAPTA) and economic cooperation with India