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By CBSNews.com staff CBSNews.com staff

January 29, 2002 / 11:07 AM EST / CBS

A Pakistani Foreign Ministry spokesman says his nation is willing to talk about removing troops from India's border.

If the talks go well and India agrees to a "phased withdrawal" of its troops, the Pakistani official says the two countries could then talk about settling the Kashmir dispute.

The spokesman also says Pakistan would be willing to restore road, air and rail links between the two nations -- links severed last month by India after an attack on India's parliament.

But Pakistan also expressed disappointment on Tuesday over a statement by Indian Prime Minister Atal Behari Vajpayee which set strict terms for peace talks over Kashmir and said India had stepped up firing across their disputed border.

"It is unfortunate that despite the goodwill shown by us, despite all the steps that we have taken, that the response has been negative," Pakistan Foreign Ministry spokesman Aziz Ahmed Khan told a news briefing.

"Absurd excuses are sometimes being made not to come to the talks or not to hold the talks," he added.

Vajpayee said on Monday that while diplomatic efforts were making progress, there was no chance of peace talks unless Pakistan handed India the one-third of Kashmir it controls.

"If Kashmir is the central issue, then one-third of Kashmir is occupied by Pakistan illegally," the Press Trust of India quoted Vajpayee as saying. "Therefore, they should return that to India and then start talks."

The two countries have mobilized around a million troops along their border after New Delhi blamed Pakistan-based Muslim militants for the bloody December attack on its parliament.

Pakistan has consistently called for dialogue to settle the stand-off and has cracked down on militant groups blamed for the parliament attack, but India says it will not de-escalate until Pakistan stops backing what it calls "cross-border terrorism."

Indian analysts said Vajpayee's statement did not represent a significant change.

"The position has remained the same. It is a strategy of using coercive diplomacy and force to ensure that Pakistan is under pressure to end cross-border terrorism," C. Raja Mohan, The Hindu newspaper's strategic affairs editor, told Reuters.

India would wait for Islamabad to hand over men on a list of 20 alleged terrorists and criminals it says are sheltering in Pakistan and for evidence militants had stopped slipping into Indian Kashmir, he said.

"Once that happens, there will be diplomatic de-escalation and then negotiations," Mohan said.

India controls about 45 percent of Kashmir, Pakistan a third and China the rest. Pakistan says Kashmiris should be allowed to vote on their future, while the entire region is claimed by New Delhi as an integral part of India.

Indian authorities say more than 33,000 people have been killed in 12 years of rebellion in Kashmir. But separatists put the toll closer to 80,000.

As the two nuclear-armed rivals exchanged fresh small arms fire across their border n Tuesday, the top spokesman for military ruler General Pervez Musharraf told Reuters incidents of Indian firing across the ceasefire line in Kashmir had increased.

"There is a slight increase, not only in frequency but also in intensity," Major-General Rashid Qureshi said.

"They would initially fire small arms like rifles and machine-guns, but we have detected an increasing intensity and frequency of firing and the Indians are now using mortars, 81 mm mortars and 120 mm heavy mortars," he added.

At least seven Pakistani civilians, three of them children, were killed and 14 wounded on Monday by Indian fire across the Line of Control in Kashmir, police said.

And in fresh violence across Jammu and Kashmir on Tuesday, 10 rebels and one Indian soldier were killed in clashes between security forces and militants.

Officials said a paramilitary soldier and three members of the Pakistan-based Al-Badr militant group died in a 20-hour gunbattle in Srinagar, the state's summer capital.

A paramilitary spokesman said six others were wounded in the gun battle that broke out late on Monday when militants holed up in a home in a Srinagar suburb clashed with paramilitary forces.

Earlier on Tuesday, security forces shot dead two militants in another gunbattle near the Pakistan border.

Elsewhere, five militants were killed in separate gun battles.

The South Asian rivals have fought three wars since their independence in 1947 and the military stand-off has raised raising fears of a fourth war between the nuclear powers.