NEW DELHI: India on Thursday welcomed Pakistan's decision to phase out major restrictions on Indian imports by the end of this year, a move to normalise trade ties between the two neighbours.

India's Foreign Minister S.M. Krishna thanked Pakistan for deciding to gradually scrap the “negative list” that prevents the export of hundreds of items from India.

“Pakistan is moving in the right direction in terms of bringing economic content into the political relationship,” Krishna told reporters in New Delhi.

“This would certainly help strengthen our bilateral ties.”

Islamabad has decided in principle to phase out the negative list between the two countries by December 31, 2012, which will complete the trade normalisation process.

India's Associated Chambers of Commerce and Industry, a trade body estimated that the move will increase cross-border trade to over $6 billion by 2014.

Direct trade between India and Pakistan currently constitutes less than one per cent of their respective global trade.

India exported goods worth $2.33 billion to Pakistan last year while its imports were $330 million.