India and Pakistan on Monday indicated that irrespective of the differences that existed between the two nuclear rivals at the political level, they were willing to move forward to boost economic relationship.

Admitting that bilateral trade was indeed abysmal, the leaders of both the countries said a strong regional association would not only benefit the people of the two nations it would also help reduce poverty in South Asia, home to one-fifth of the world's population.

External Affairs Minister Yashwant Sinha and High Commissioner-Designate of Pakistan in India Aziz Ahmad Khan were speaking at the inauguration of the third meeting of the India-Pakistan Chamber of Commerce and Industry in New Delhi.

Addressing a gathering of about 300 businessmen from both countries, Sinha said: "The overwhelming participation is clearly a reflection of the hitherto unfulfilled yearnings of the people of the two countries to find ways to contribute to enhanced trade and economic exchanges."

"It would lead to employment and income generation and would benefit the people fof both nations."

The largest-ever Pakistani business delegation to visit India consists of about 150 businessmen and some family members. The delegation is in India to explore possibilities of increasing export and import between the two countries.

The two-day seminar is being organised by the Federation of Indian Chamber of Commerce and Industries.

Khan, who arrived in India last week, said there was a need to form a regional economic association on the lines of the European Union. The region, he said, was being crippled by poverty, adding, "we must reinforce synergy among our regional neighbours."

Echoing similar views, Sinha called for the formation of a South Asian Union.

He said: "We should start thinking of a South Asian Union. If other regions could achieve this kind of union, despite political, social and economic difference, there is no reason why we should deprive our people of this opportunity."

Both the leaders also agreed that trade between India and Pakistan was abysmally low, and business can flourish only in peace and harmony.

Sinha said: "My intention is not in any way to wish away or underplay the differences that exist between us. We must, at the same time, exploit the potential for cooperation that exists."

According to Sinha, trade relation between India and Pakistan has hovered around $200-250 million in the last several years. This is substantially low as compared to India's trade relations with other neighbours like Sri Lanka, Nepal and Bangladesh.

Giving example of successful trade relations between US, Canada and Mexico, Sinha said the fear in Pakistan that the larger economy will inevitably swamp the smaller neighbouring economies was uncalled for.

Both the leaders expressed their hope that air and rail links between the two countries would be resumed soon. India and Pakistan have announced the resumption of bus service between Delhi and Lahore from July 11.

Apart of many other things, the business tycoons will press their respective governments for providing infrastructure and increasing travel links to facilitate trade.

While welcoming the delegates, AC Muthiah, president of FICCI, urged Pakistan to provide the Most Favoured Nation status to India so that all tradable items can be exported to Pakistan. The tradable item is currently restricted to 600.

India has already given this status to Pakistan.

But Ilyas Ahmed Bilour, president of the India-Pakistan Chamber of Commerce and Industry, said the granting of MFN status was not so important.

"It is important that we work on the avenues available to us. Pakistan will give MFN status to India in course of time," he said.

The business communities from both sides also urged the respective governments to take action to curb illegal trade, which is estimated to be 100 times more than trade through legal routes.

Many Indian products are imported in Pakistan via a third country due to trade restrictions, thus increasing the price substantially.