Nov. 15 (Bloomberg) -- India and Pakistan agreed to set up a joint anti-terrorism panel as part of efforts by the South Asian neighbors to improve relations, following the resumption of talks stalled by July's Mumbai train blasts.

Pakistan's Foreign Secretary Riaz Mohammad Khan and his counterpart Shivshankar Menon reached agreement on the joint system after two-day talks that ended today in New Delhi. The three-member anti-terrorism panel will be headed by additional secretary level officials from the foreign ministries of both sides, they said in a joint statement.

``Its mandate would be to consider counter terrorism measures including through the regular and timely sharing of information,'' the countries said.

Terrorism and Kashmir, a Himalayan region divided between India and Pakistan since 1947 and claimed in full by both, are key to the conflict between the neighbors. Control of Kashmir was at the center of two of the three wars fought between the neighbors, while a 17-year insurgency in the part of the territory controlled by India has killed at least 50,000 people.

Nuclear-capable India and Pakistan have been improving ties since 2003, restoring diplomatic, transport and sporting links, after they came close to fighting a fourth war in 2002.

India accuses Pakistan of supporting separatist groups fighting Indian rule in Jammu and Kashmir, the country's only Muslim-majority state. Pakistan denies the accusation, saying it only gives moral support to a freedom struggle.

Mumbai Train Blasts

A meeting of foreign secretaries that was scheduled for July 20 and 21 was postponed by India after the Mumbai commuter train blasts that killed 184 people, with Prime Minister Manmohan Singh's government linking progress in the talks with Pakistan ceasing support for terrorism.

India has given some ``material,'' which refers to ``some linkages'' on terrorism, Khan said. The material doesn't relate to the Mumbai blasts, Khan said in a press conference.

The material refers to ``cross-border'' terrorism, Menon said in a separate press conference. It doesn't include any evidence on the Mumbai blasts because charges haven't been filed yet, he said. Menon expects the joint mechanism being established by the two sides will consider the material presented by India on cross-border terrorism.

Khan said Pakistan resented the ``finger pointing'' by India ``within 15 minutes'' of the blasts. Terrorism was a global phenomenon and that neither country could afford to destabilize the other, he said.

Joint Panel

The joint panel may not function as envisaged because of the differences between the two.

``It will not be a functional body because Pakistan and India's views on terrorism are totally divergent, rather antagonistic,'' said Rashid Ahmed Khan, analyst at the Islamabad Policy Research Institute. ``Otherwise, the meeting is a positive development because it is taking place after four months when it appeared as if the peace process had collapsed.''

Nothing of much substance has been achieved, said G. Parthasarathy, former Indian ambassador to Pakistan.

``The mechanism is not going to resolve the problem of terrorism, as long as Pakistan sponsors terrorism at the level of the state,'' Parthasarathy said.

Any progress will take place only if Pakistan takes some action on terrorism, said Shashank, former Indian foreign secretary, who uses one name.

``There's a tremendous amount of skepticism in India and I believe in Pakistan also, on the utility of joint mechanism,'' he said.

Troop Withdrawals

India will consider further troop withdrawals if violence is reduced in Jammu and Kashmir state, Menon said. Eight Kashmiri rebels and an Indian soldier were killed in three separate gun battles in the Kupwara district of Jammu and Kashmir, the Press Trust of India reported, citing a defense spokesman it didn't name.

Both the sides reviewed the progress of a 42-month-old peace process during the meeting. They exchanged views on the issue of Jammu and Kashmir to ``hold purposeful discussions and to build on convergence and narrow down divergences,'' the statement said.

Talks restarted after Indian Prime Minister Singh and Pakistan President Pervez Musharraf agreed on Sept. 16 in the Cuban capital Havana to resume the peace process and discuss Kashmir and other border disputes.

The two sides agreed to implement measures to enhance ``interaction and cooperation'' across the border, according to the statement. They also agreed to the early start of truck services to promote trade.

Nuclear Risk

India and Pakistan, who were slapped with sanctions for testing nuclear devises in 1998, also agreed to consider a treaty on reducing the risk of nuclear accidents.

The two countries exchanged views on a two-decade-old border dispute over control of the Siachen glacier in the Himalayas, without making any progress.

``Siachen once again suffered because of the trust deficiency,'' Shashank said.

The two sides agreed to talks on the Sir Creek dispute on Dec. 22 and 23. The foreign secretaries will meet next in Pakistan's capital Islamabad in February.

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net.

Last Updated: November 15, 2006 08:31 EST