Indian leader says he's ready for 'dialogue'

Musharraf, right, and Vajpayee met on the sidelines of the Nepal summit -- their first face-to-face meeting since December 13.

NEW DELHI, India (CNN) -- After weeks of heated rhetoric, accusations and military posturing, Indian Prime Minister Atal Bihari Vajpayee reached out to rival Pakistan on Sunday, saying his nation was ready for "dialogue" with its fellow nuclear power.

"We are ready to discuss issues with Pakistan -- all issues, including Jammu and Kashmir," said Vajpayee in a brief appearance with British Prime Minister Tony Blair. "India stands for dialogue. We believe in an exchange of views. We believe in negotiations to solve problems."

The comments came hours after Vajpayee shook hands but discussed little with Pakistani President Pervez Musharraf at the end of the South Asian Regional Cooperation meeting in Kathmandu, Nepal.

Tensions between the two countries have been high since gunmen attacked India's parliament December 13 -- an attack staged by terrorists supported by Pakistan, according to New Delhi officials.

Both sides have repositioned troops in recent weeks in the Kashmir region, over which the South Asian neighbors have waged two of three wars since 1947.

Pakistani authorities have arrested scores of Pakistani-based militants, even as the nations traded artillery fire near the border.

In the latest sign of brewing tensions, Indian army officials said it fired on an unmanned Pakistani plane Sunday in the Kashmir.

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Pakistani officials called the claims "baseless propaganda," saying the downed plane -- and two others that crashed this weekend -- were Indian.

While the Nepal summit did not produce any breakthrough discussions, as Musharraf had hoped, it did allow leaders of both countries to talk face-to-face for the first time since last month's attack.

Vajpayee called the meeting, which occurred while the other leaders were in the room, a "courtesy call."

The two men did not discuss anything of importance, Vajpayee said, but the Indian prime minister did point out that Musharraf never used the word "terrorism" in his summit-ending speech.

The Pakistani leader told reporters he hoped the "informal interaction" could generate more formal discussions.

While he said he was "determined to eliminate terrorism," Musharraf said it was important a distinction be made "between acts of legitimate resistance and freedom struggles on the one hand and acts of terrorism on the other."

The characterization of forces opposed to Indian rule in Kashmir and Pakistan's support for them is one the most divisive issues between the two nations.

India accuses Pakistan of giving the groups military and financial support. Authorities in Islamabad say they provide only moral and diplomatic support to what they call "freedom fighters."

Still, Musharraf has also condemned the December attack and pushed for peace talks.

"If there is no durable peace, there will be little progress," he said in the summit-closing speech Sunday. "If bilateral differences continue unresolved, genuine cooperation will remain an elusive dream."

President Bush, Blair and several other world leaders have sought in recent weeks to deescalate tensions, a matter made all the more pressing by the ongoing military action in nearby Afghanistan.

"On the one hand, there has to be a complete rejection of these types of terrorist acts and support of them, in any shape or form at all," said Blair, who will meet with Musharraf on Monday in Islamabad.

"And on the other side, there needs to be meaningful dialogue. And it seems to me a sensible way to proceed."