India, Pakistan agree to Kashmir border trade route

NEW DELHI (Reuters) - India and Pakistan agreed on arrangements to open a border route for bilateral trade in disputed Kashmir, a joint panel said on Monday, even as the two uneasy neighbors exchanged gunfire in the region.

"We have finalized the arrangement, the trade list and the modalities," Aizaz Ahmed Choudhary, a senior foreign ministry official leading a Pakistan delegation, said in New Delhi.

"We will go back to our respective governments, it is for them to decide," he said after talks with Indian officials.

A joint working group comprising senior government officials from both countries held talks on starting border trade in Kashmir following unrest in India's Jammu and Kashmir state over a planned government land transfer to Hindu pilgrims.

Last month, Hindus in Jammu region cut off supplies to the mountainous Kashmir area after the government backed out of its

promise to transfer land to build shelters for Hindu pilgrims.

The dispute polarized Indian Kashmir, split between the Muslim-majority Kashmir valley and the Hindu-dominated region around Jammu city, severely curbing trade between the two areas.

As a result, traders in Kashmir wanted to sell their goods in neighboring Pakistan and asked the government to talk to its neighbor.

About 37 protesters have been killed by government forces during demonstrations in the Kashmir Valley since last month, some of the biggest protests since a separatist revolt began in the Himalayan region in 1989.

On Monday, the joint panel said they were happy to open the Srinagar-Muzaffarabad highway to trade, but did not spell out details.

Officials said bilateral trade would help improve relations between the two countries. On Monday, Indian and Pakistani soldiers fired at each other in Kashmir, wounding a Pakistani woman, security officials said.

Often bitter relations between the two neighbors were strained further after India blamed Pakistan's spy agency for a suicide bomb attack on its embassy in Kabul in July.

India has also expressed concern about the possibility of Pakistani support for militants after recent bomb attacks in their country.

Pakistan denies those charges, saying it offers political support to what it calls a legitimate freedom struggle.

(Reporting by Nigam Prusty; Writing by Bappa Majumdar; Editing by Paul Tait)