India is the world's biggest tea producer; rival Pakistan its third-largest importer.

Pakistan is a leading cotton producer; India a traditional importer. It should be a perfect partnership.

Yet, split by their 55-year conflict over Kashmir, Pakistan turns to Kenya to satisfy most of its tea drinkers and India to the United States for its cotton.

But traders and analysts are optimistic this could change as the nuclear rivals edge warily closer to peace talks after Prime Minister Atal Bihari Vajpayee last week pledged a final and decisive bid for peace.

"It is time for business to drive politics and not for politics to dictate business," said G Chandrasekhar, commodities editor of Hindu Business Line.

"Trade can be the best vehicle for peace," the Confederation of Indian Industry's T K Bhaumik told Reuters. "Almost everything and anything can be traded between the two countries."

Bhaumik said trade could pass $1.0 billion a year from $200 million and grow about 15 per cent yearly if relations improve.

"Trade has been going on between the two countries through Dubai and Iran," said Haji Majeed, a wheat trader in Pakistan's port city of Karachi.

"If direct trade is opened then it will benefit Pakistan."

Tea is best bet

India's tea industry is keeping its fingers crossed for better relations so it can make inroads into Pakistan's market.

"Tea appears to be the best bet this year," Chandrasekhar said.

Pakistan, the world's largest importer after Russia and Britain, buys 110-130 million kg of tea a year --- about 60 per cent from Kenya and the rest from Sri Lanka and Bangladesh.

"We can really pump in tea if the land routes open up," said Naba Kumar Das, chairman of India's state-run Tea Board.

Officials say if access improves, India could immediately sell up to 10 million kg tea to Pakistan and also push more tea into Afghanistan using the land route.

"If something is surplus there, it can come down here which we can pass onto the CIS (Commonwealth of Independent States) because we have access to Afghanistan," said Karachi rice trader Akbar Hashwani.

But growth in commodities trade would be a gradual process, traders said, given that both India and Pakistan currently have a surplus of sugar and a shortage of cotton.

"Two years back, Pakistan imported sugar from us, three years ago we bought sugar from them," said Maharashtra State Cooperative Sugar Federation managing director, Prakash Naiknaware.

"So, we should keep the channels open as logistically we are ideally suited to deliver or receive sugar," he said.

Traders said Pakistan could benefit in the long term by selling cotton grown in the Punjab province, where the price is cheaper and quality is the same, to textile mills in northern India to supplement their local supply.

"There is a potential to import 500,000 to one million bales of cotton every year from Pakistan," said I J Dhuria, general manager of the Vardhman Spinning and General Mills Ltd in Indian Punjab.