NEW YORK - Leaders of India and Pakistan have agreed that terrorism has no place in their bilateral relationship as they decided on a series of confidence-building measures, including commencing of cross-Line of Control (LoC) trade in Kashmir from October 21. President Asif Ali Zardari and Indian Prime Minister Manmohan Singh, meeting for the first time on the sidelines of the UN General Assembly, decided that a special meeting of the Joint Anti-Terror Mechanism will be held next month to address mutual concerns, including the bombing of the Indian Embassy in Kabul. A joint statement issued after over an hour-long meeting at the Millennium Hotel, across the UN, said severe action would be taken against any elements directing or involved in terrorist acts. Zardari described Manmohan Singh as the architect of modern India, and assured him that Pakistan stood by its commitments of January 6, 2004 when it pledged not to allow cross-border terrorism. "Both leaders acknowledged that the peace process has been under strain in recent months. They agreed that violence, hostility and terrorism have no place in the vision they share of the bilateral relationship and must be visibly and verifiably prevented," the joint statement said. Two trade routes across the Line of Control in Kashmir, the Himalayan region divided between the two rivals, will open from Oct 21 to help improve ties, it said. Agencies add: Zardari and Manmohan agreed to kickstart an embattled peace dialogue between the two nuclear-armed rivals, with a new round of talks to be scheduled by year's end. The two sides decided to launch trans-border trade on the Srinagar-Muzaffarabad and Poonch-Rawalakot roads connecting the divided parts of Jammu and Kashmir across the Line of Control from Oct 21, the joint statement said. It further said a third route between Kargil and Skardu will also be discussed. This is the first major confidence-building measure since a civilian dispensation took charge in Islamabad nearly six months ago. Stressing the importance of economic cooperation and people-to-people contacts, the two countries agreed to open the Wagah-Attari road link and Khokrapar-Munabao rail route to all items of trade agreed earlier by the two countries. Officials of both sides will meet soon to discuss the modalities for opening of the Skardu-Kargil route as well. "The leaders met for well over an hour, spent most of their time without aides and had a comprehensive discussion of the entire realm of issues in our relationship," Indian Foreign Secretary Shiv Shankar Menon told reporters. "They shared a vision of how they want to take it forward, and at the end of it both expressed satisfaction at the quality and nature of the discussions they had," he said. "This is a strong statement on terror. We will move in tandem on all issues, including terrorism," Menon told reporters after the one-on-one talks between the two leaders for nearly 45 minutes without aides. The meeting was characterised by warmth and personal gestures. Zardari hugged Manmohan Singh twice and spoke admiringly of him. "You are the leader of modern India," Zardari said, setting a positive note for the engagement between the two countries. "I hope to learn from him." Asif Zardari told reporters that his country now faced a difficult situation, but he was hopeful about resolving the long-standing issue of Kashmir with India. "So I think there is an impetus of a new dialogue with the realisation and the growth of this generation, I think people of India and people of Pakistan should themselves decide," he said. Manmohan Singh, on his part, congratulated Zardari on his election as President and "the victory of democracy in Pakistan" and expressed the hope that this would pave the way for "a profound transformation of the bilateral relationship" - remarks that underlined New Delhi's keenness to build equations with the new civilian dispensation in Pakistan. The Indian Premier also praised Zardari's vision for a progressive South Asia, saying they decided that issues be resolved through "peaceful" means. From India's point of view, the meeting was "satisfactory" as the joint statement accommodated its concerns on "terrorism". "We are quite clear that an atmosphere free of violence and terrorism is necessary for dialogue to move forward. We will work towards the solution of all issues that divide us, including Jammu and Kashmir," Menon underlined. The meeting between Manmohan Singh and Zardari, the first after the Pakistan Peoples Party leader became President early this month, broke the nearly three-month-old stalemate after India accused Pakistan's spy agency ISI of orchestrating the July 7 bombing of the Indian Embassy in Kabul. The meeting between the two leaders called for consolidating the gains made through sustained efforts to resolve all outstanding issues. They discussed an entire range of bilateral issues, including the resolution of the Kashmir dispute. "They agreed to work for an early and full normalisation of relations between India and Pakistan on the basis of mutual respect, peaceful coexistence and non-interference," the two-page statement said. Underlining that "violence, hostility and terrorism must be visibly and verifiably prevented", the two leaders vowed to defeat the "forces that have tried to derail the peace process". "This would allow the continuation and deepening of a constructive dialogue for the peaceful resolution and satisfactory settlement of all bilateral issues, including Jammu and Kashmir," said the statement. The two leaders took a slew of positive steps focusing on "deliverables and concrete achievements" that included scheduling meetings of the fifth round of composite dialogue launched in July this year. In the light of recent ceasefire violations and the spurt in infiltration, they also agreed to hold meetings of Director General of Military Operations (DGMOs) and sector commanders to stabilise the ceasefire. In their first discussions since Zardari replaced former military strongman Pervez Musharraf in August, the two leaders also called for an ongoing ceasefire to be "stabilised." The leaders agreed that their foreign secretaries will schedule meetings of the fifth round of the composite dialogue in the next three months to focus on "deliverables and concrete achievements", the statement said Manmohan and Zardari appeared satisfied as they emerged from the meeting. The meeting helped eased tensions, officials from both sides said. The two leaders also agreed on expansion of people to people contacts, trade, commerce and economic cooperation as it provides an effective platform to develop and strengthen bilateral relations. They also agreed to continue interaction between the Planning Commissions of both the countries to develop mutually beneficial cooperation including the energy sector.