Pakistani Interior Secretary Syed Kamal Shah says the issue of hundreds of prisoners from both countries being held in each other's jails tops the agenda of the two-day talks. Most of the prisoners are fishermen and civilians who strayed across borders, or people held for violating visa regulations.
"As far as we are concerned we feel that people of both countries are concerned about these prisoners," he said. "The sooner they go home the better. So we have come with a very positive mind, very open mind."
The prisoner issue came into sharp focus in recent weeks after Pakistan's Supreme Court upheld a death sentence on an Indian man, Sarabjit Singh, convicted of spying and organizing bomb blasts in the city of Lahore. The convicted man's family says he is a farmer who strayed across the border while drunk, and has urged Islamabad to grant him clemency.
Indian Home Secretary V.K. Duggal told reporters he would ask Islamabad to hand over several wanted criminals and terrorists New Delhi says have taken refuge in Pakistan.
"They are known international-level criminals, and they have been indulging in anti-national and terrorist activities, they should face the process of law," he said. "So we will once again appeal to my counterpart."
On top of the list is India's most wanted gangster, Dawood Ibrahim, who New Delhi says was involved in organizing bomb attacks in Bombay in 1993. Islamabad has denied that he lives in Pakistan.
Officials are also reviewing steps taken to combat terrorism and drug trafficking. New Delhi says it will urge Pakistan to widen cooperation on ending terrorism and to dismantle camps in Pakistani territory that India says are used to train insurgents fighting in Kashmir. Islamabad denies such camps exist.
Both sides expressed confidence that the current climate of peace prevailing between the two countries will enable them to make progress at these talks.
India and Pakistan began a peace dialogue last year to lower tensions and normalize their relations. The talks range from trade, transport, defense and nuclear issues to the disputed region of Kashmir, which both countries claim.