Indian and Pakistani business leaders said Thursday there were big opportunities to boost direct trade between them after the rival nations agreed to work harder at opening up their markets.

While formal trade between the two most populous and largest economies in South Asia is a paltry $2.7 billion annually, unregulated trade, much of it routed through third countries, is estimated at $10 billion.

This informal commerce shows "the tremendous potential for bilateral trade," said Federation of Indian Chambers of Commerce and Industry secretary general Rajiv Kumar.

Cross-border commerce currently amounts to less than one percent of each country's global activity, but the two sides harbour hopes of increased trade in areas such as engineering and textiles.

"There is a large market to be opened up," said Rajan Bharti Mittal, managing director of India's Bharti Enterprises, parent of the country's largest mobile phone operator.

The comments came as India's commerce minister Anand Sharma announced he would lead a trade delegation to Islamabad next February at the invitation of his Pakistani counterpart, Makhdoom Amin Fahim.

The two agreed in New Delhi late Wednesday to more than double trade within three years to $6 billion, set up a second trade border check post and make it easier for Indians and Pakistanis to get business visas.

Both governments "are committed to normalisation of trade relations," said Fahim, whose five-day visit at the head of a large business delegation is the first by a commerce minister to India in 35 years.

"We're already trading with each other via third nations. This shows there is a need in both countries for each other's products," Bashir Hussain, chief executive of the Pakistan Horticulture Development and Export Company, said.

India is also eyeing improved trade ties with Pakistan as a way to gain better access to the republics of Central Asia while Pakistan is keen to tap India's vast market of 1.2 billion people.

Fahim's visit was part of the resumption this year of formal peace talks between India and Pakistan, called the "composite dialogue," broken off after the 2008 Mumbai attacks in which 166 people were killed by Pakistani gunmen.

Deepening economic engagement between the two countries, which have fought three wars against each other since independence from Britain in 1947, is seen as crucial to establishing lasting peace in the troubled South Asian region.

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