NEW DELHI // The leaders of India and Pakistan yesterday shook hands, smiled and agreed to try to end six years of confrontation with new peace talks.

It was the first time an Indian prime minister had hosted his Pakistani counterpart for official talks in Delhi since the 2008 attacks in Mumbai by the Pakistani militant group Lashkar-e-Taiba, which killed 166 people.

Both sides described yesterday’s 50-minute meeting as cordial, but on his first day in office Narendra Modi delivered a blunt warning to Pakistan: he told Nawaz Sharif that Islamabad must prevent militants on its territory from attacking India.

The Indian foreign secretary Sujatha Singh said later that Mr Modi “underlined our concerns related to terrorism” to Mr Sharif.

“We want peaceful and friendly relations with Pakistan. However, for such relations to proceed, it is important that terror and violence is brought to an end,” she said.

“There was discussion on trade and we noted that we were fully ready to fully normalise trade and economic relations.”

Before their meeting the two leaders smiled for the cameras on the steps of Hyderabad House, a former palace close to the main ceremonial avenue in New Delhi.

Mr Sharif later hailed a “historic opportunity” for closer ties and said the talks had been “warm and cordial”.

Mr Modi has an image as a hardliner, even within his own Hindu nationalist party, and is regarded with deep suspicion by many in Pakistan after deadly anti-Muslim riots erupted in his western fiefdom of Gujarat in 2002.

Earlier Mr Modi announced his cabinet. Sushma Swaraj, the most senior woman in the BJP, was named foreign minister. Arun Jaitley emerged as the most powerful man after Mr Modi with the key finance and defence portfolios, and the BJP president Rajnath Singh was appointed home affairs minister.

The meeting between Mr Modi and Mr Sharif marked a fresh start for India-Pakistan relations, analysts said.

“It is a major step, but there have been major steps before and relations have not got any better,” said Kamal Mitra, a professor of international studies at Jawaharlal Nehru University in New Delhi.

“You have two different roads that are criss-crossing all the time. The one of friendship symbolised most with trade and the one of terrorism and insecurity with Kashmir at the centre,” he said.

The meeting was also only the second between prime ministers from India and Pakistan since peace talks resumed in 2011 after dialogue was shattered by the Mumbai attacks.

Mr Sharif won elections last year to become Pakistan’s prime minister for the third time and has pledged to improve ties with India. The visit was his first to India since 1991, when he attended the former prime minister Rajiv Gandhi’s funeral in New Delhi.

While India and Pakistan share a 3,200-kilometre border and have mutually understandable languages, trade between the nations totalled just US$2.6 billion (Dh9.55bn) last year – less than 0.5 per cent of India’s combined commerce with other nations, according to government data.

Pakistan has yet to follow through on a November 2011 pledge to grant India most-favoured nation status, which would provide greater access to Indian exports. The move would remove 1,200 items from a banned list.

Moves to increase trade however have been overshadowed by their dispute over the Kashmir region, which both countries claim in full.

“While we want closer ties with Pakistan, I don’t think it would be possible,” said Dipankar Banerjee, founding director of the Institute of Peace and Conflict Studies in New Delhi, who commanded troops on the border with Pakistan. “There are elements within Pakistan strongly against any such moves. They will try to put obstacles in the way of any rapprochement.”

Some progress on peace talks has been made even while breakthroughs have been elusive. Eighteen months ago, India and Pakistan agreed on a new visa regime to make travel between the countries easier, a measure meant to spur regional trade and establish trust.

Meanwhile, in a sign Mr Modi’s administration was serious about a campaign pledge to curb rampant graft, the cabinet yesterday announced a special investigation team to track illicit funds or “black money”.

The probe will be headed by a former supreme court judge, the law minister, Ravi Shankar Prasad, said.

* Reuters and Bloomberg News