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Now India-China model for India-Pakistan ties?

At the lunch, Zardari told Manmohan Singh that India and China have many differences, but their trade ties are going up, said government sources.

New Delhi: In a potential paradigm shift in bilateral ties, Pakistan on Sunday agreed with India to adopt the "India-China model" in negotiating their sensitive relationship, which entails focusing on scaling up trade while resolving outstanding issues in a "step-by-step" incremental manner.

After holding 40-minutes of one-on-one talks at the prime minister`s 7 Race Course Road residence, the discussions extended over a lavish lunch involving senior ministers and officials from both sides.

At the lunch, Zardari told Manmohan Singh that India and China have many differences, but their trade ties are going up, said government sources. Zardari indicated, said sources, that that the India-China model could help improve the relations between India and Pakistan as well.

In their talks also preceding lunch, Manmohan Singh and Zardari agreed on the need to tap economic potential and the need for positive movement in the direction of liberalising trade, said the sources.

India has been pitching for the India-China model in talks with Pakistani interlocutors for a long time, a model endorsed by Beijing, but Islamabad had not responded enthusiastically as its political establishment saw Kashmir as the "core issue" that needed to be resolved before trade normalisation can take place.

But in the past few months, with Pakistan moving in the direction of granting India the Most Favoured Nation status, the Kashmir-first-and-trade-later equation has been reversed in favour of simultaneously pursuing both trade and discussions on the contentious Kashmir issue, over which the two nations have fought three wars.

The India-China model, said sources, could be a potential game-changer in the accident-prone India-Pakistan relationship as it envisages a pragmatic approach to keep working at enhancing economic ties that benefits both countries while taking a long-strategic range view to resolve complex outstanding issues like Kashmir.

Despite the decades-long boundary dispute, India and China, the two rising Asian powers, have managed to scale up bilateral ties to over USD 70 billion and set an ambitious target of USD 100 billion by 2015.

Compared to that, bilateral trade between India and Pakistan stood at a mere USD 2.7 billion, with trade balance heavily in favour of India. The Confederation of Indian Industries (CII) has predicted that trade between may touch USD 10 billion by 2015, if trade and investment barriers are removed.

Manmohan Singh underlined this new spirit of pragmatism in ties after talks with Zardari. "We are willing to find practical, pragmatic solutions" to all issues dogging their ties "and that`s the message that President Zardari and I would wish to convey," he said.

In his conversation with Zardari, Manmohan Singh stressed that the two countries needed to make progress on every issues step by step, an incremental approach that was also welcomed by the Pakistani side, said the sources.

This is in stark contrast to the dialogue in Islamabad between their foreign ministers in July 2010 when the talks collapsed because then Pakistan`s foreign minister Shah Mahmood Qureshi insisted on unrealistic deadlines for resolving issues like Kashmir, Siachen and Sir Creek.

Manmohan Singh, who has invested much diplomatic capital in turning around the volatile India-Pakistan relations, has been an eloquent advocate of greater trade and people-to-people contacts which, he has stressed, will make the borders irrelevant.

Capping years of negotiations, home secretaries of India and Pakistan are set to sign a visa liberalisation agreement soon that will ease travel between people of the two countries.