Islamabad, Dec 11 (IANS): Pakistan Prime Minister Nawaz Sharif Wednesday said his country believes in resolving all issues with India peacefully and diplomatically "through dialogue based on parity".

Talking to Indian High Commissioner T.C.A. Raghavan here, Sharif said Pakistan desired friendly relations with all its neighbours, particularly with India, the Associated Press of Pakistan (APP) reported.

"We have no option but to live in peace in the interest of the people of Pakistan and India," the prime minister said.

"My government is committed to improving relations with India."

"We need to work towards setting aside the baggage of history, prevailing mistrust and lack of flexibility. I am convinced that we have no option but to normalise relations for the sake of peace and betterment of our peoples," he added.

Sharif said representatives from both the countries should hold regular interactions at all levels.

"We should continue to hold regular meetings and interactions at all levels as these will help towards normalising of relations."

Expressing his desire to enhance trade relations with India, Sharif said: "We look forward to further interactions between the two ministries of power and commerce to discuss ways and means in moving forward on trade matters."

He said there was also the need to increase people to people contacts, including visits of pilgrims, and termed it "an important confidence building measure".

The prime minister also called for further strengthening of the existing mechanism on meetings on the Line of Control (LoC).

"I believe that sincere and constructive measures need to be taken to reduce tension on LoC and to ensure that the ceasefire agreement of 2003 remains intact," Sharif said.