ISLAMABAD, Aug 11: The two-day talks between Pakistan and India on the issue of terrorism and drug smuggling ended here on a positive note but without reaching an agreement.

The foreign office issued a joint statement according to which frank and candid discussions were held in a constructive and cordial atmosphere aimed at taking the talks process forward.

Both sides reaffirmed their determination to combat terrorism and emphasized the need for complete elimination of the menace. They assessed as positive the increasing cooperation and information sharing between narcotics control authorities of the two countries and agreed to work towards a memorandum of understanding to institutionalize cooperation in this area, and to designate officials in their respective high commissions to liaise on drug control issues.

A source in the interior ministry told Dawn that the talks on terrorism remained inconclusive on Wednesday because of the Islamabad's refusal to hand over an alleged underworld's chief and head of a militant Islamic group.

The source said that during the negotiations, India had demanded that alleged underworld 'Don' Daud Ibrahim and Maulana Masood Azhar, the chief of a militant group fighting in Kashmir, be handed over to it. However, Pakistan rejected the demand, saying: "It has no concern with the wanted persons," the source said.

On the other hand, interior ministry spokesman Chaudhry Abdul Rauf claimed that the talks remained "successful" and both the sides had agreed to hold another round of talks in near future.

The source said both Pakistan and India did not agree on each other's opinions on 'terrorism' and 'state terrorism'. The Pakistan side was of the view that India was committing state terrorism in the held Kashmir while Indian delegation accused Pakistan of supporting militant groups engaged in the freedom movement in the valley.

The talks between Indian delegation, headed by Indian Home Secretary Dhirendra Singh, and Pakistani side, led by Interior Secretary Tariq Mehmud, were held under the composite dialogue process.

During the talks, Pakistan announced release of 41 Indian civilian prisoners whose national status had already been confirmed by India, the source said. Pakistan had also decided to release 406 Indian fishermen in near future, the source said.

About 150 civilian prisoners of India are also in the custody of Pakistani authorities but they cannot be released due to non-confirmation of their identity. In this connection, India has been asked to confirm the national status so that necessary preparation for their release can also be initiated.

Talking to Dawn, foreign office spokesman Masood Khan said both sides described their positions and exchanged information. Responding to a question about Pakistan's opinion on terrorism and state terrorism, he said: "Prescribed definitions of terrorism have evaded the UN for the last six decades despite determined efforts by delegates and experts.

"As far as Pakistan is concerned, we oppose terrorism in all its forms and manifestations. There is a clear differentiation between the freedom fighter and terrorist."

He further said that the foreign secretaries of the two countries would review the progress on Sept 4 on different agenda items of the meetings held between the two sides under the composite dialogue process and finalize their recommendations in a meeting to be held between them on Sept 5 and 6.

He said that the cycle of composite dialogue, comprising eight agenda items, would be completed on Thursday after the meeting of commerce secretaries of the two countries. Later, the Indian home secretary called on Interior Minister Faisal Saleh Hayat. Both sides agreed to continue the discussions.