NEW DELHI, Nov 22: India expects bilateral ties with Pakistan to improve from the two-day visit of Prime Minister Shaukat Aziz, beginning on Tuesday, an Indian foreign ministry spokesman said on Monday.

Mr Aziz, on his part, expressed a similar sentiment in an interview to BBC World, due to be telecast late on Monday night. Excerpts of the interview were made available by the BBC office in New Delhi.

Mr Aziz said India-Pakistan ties "have substantially improved...by and large if we look at today versus 12 months ago, we have over-flights started, flights going on, we have people-to-people contact, we have a level of trade between the two countries, we have lots of civil society contacts."

He said: "I think the whole atmosphere is getting better and if I had to do a very objective analysis of where we are today versus 12 months ago, I think we are substantially ahead from where we were 12 months ago. But there is still a long road ahead of us, and we must address various issues, including the issue of Jammu and Kashmir."

Indian spokesman Navtej Sarna, responding to a question on the rare visit, said: "We are hopeful that all the discussions will improve bilateral relations. All efforts have been in that direction."

Mr Sarna said Mr Aziz was visiting New Delhi as the chairman of SAARC, but India expects bilateral issues to be discussed. Mr Aziz said that his main purpose "is to get the dialogue process moving forward, and take one step at a time...Pakistan believes that all issues can be settled through discussion and dialogue with the relevant people, so what we have started to do is to have a dialogue."

He added: "The dialogue process is something that Pakistan is very committed to, and we believe that this could be a mechanism to lower the tension which has happened and to solve issues that haven't been addressed for a long time."

Speaking about Pakistan's position on the issue of Kashmir, Mr Aziz said: "Pakistan stands for peace, Pakistan stands for coming up with solutions for Jammu and Kashmir that reflect the aspirations of the people of that part of the world, and we believe that can be achieved through dialogue."

Mr Aziz said he feels that Saarc works better when there is improvement in India-Pakistan relations. "This year has been a turning point for Saarc because the whole organization has been re-energized, and Saarc does well when relations between India and Pakistan improve. Since relations between India and Pakistan are improving there's a new impetus there.

"Saarc is gaining momentum but there's still a lot to do, and Pakistan in its ownership has played an active role to get Saarc to where it ought to be. I'm optimistic that Saarc as a body, as a region, will be one of the more serious economic blocs in this part of the world."

Apart from his talks with Prime Minister Manmohan Singh and a callon President A.P.J. Abdul Kalam, Mr. Aziz has earmarked a meeting with former prime minister Atal Bihari Vjapayee, even though he would be going pout of protocol to call on the latter.

Indian Petroleum Minister Mani Shankar Aiyer will meet Mr Aziz when the two are expected to take up the issue of the Iran-Pakistan-India gas pipeline. According to BHP studies, the supplying of gas via pipeline could save India an estimated $10 billion over 25 years. Piped Iranian gas constituted "the most affordable long-term energy supply to India," BHP Billiton says.

Meanwhile, Indian Army Chief N C Vij has said that infiltration attempts from across the Line of Control from Pakistan are still on. The issue is expected to come up in the discussions.

Gen Vij claimed that de-induction of Indian troops in the Kashmir Valley was being done after making sure that the security forces would continue to have an edge over the militants and infiltrators.

India is also likely to insist on Pakistan conferring the most favoured nation status as a pre-condition for the proposed $4.16 billion Iran-India gas pipeline passing through Pakistan, Zeenews television said.

It said India will also insist on the security of the 2775-km pipeline infrastructure, 760 km of which pass through Pakistan, and security of supplies besides transit rights through Pakistan.

Iran has been pursuing the pipeline proposal, which will save India millions of dollars in energy cost, with New Delhi and Islamabad since 1996. The ice on the issue was broken when Prime Minister Manmohan Singh and President Gen Pervez Musharraf agreed in New York in September to look at the project as a contributor "to the welfare and prosperity of the people of both countries."