By Annie Banerji
NEW DELHI (Reuters) - India and Pakistan sealed an agreement to ease tough visa restrictions for travelers on Friday as the nuclear-armed neighbors move slowly to rebuild relations that soured in 2008 when Pakistani militants attacked India's financial capital.
The accord was signed by India's home minister and his Pakistani counterpart, weeks before the two cricket-loving nations play their first series in India since the attacks that killed 166 people.
"This is not only historic but this is a step forward for the two countries in the progress of peace," said Pakistan's Interior Minister Rehman Malik during a three-day visit to New Delhi.
Under the previous arrangement, Pakistani business travelers were restricted to certain cities, prohibiting their travel from Delhi to the nearby thriving business hub of Gurgaon without permission.
Businessmen had to report to Indian police stations in the evenings "like a criminal", Pakistani trade official Zafar Mahmood complained in April during a Pakistani trade fair in New Delhi. Indians visiting Pakistan face similar restrictions.
The change will permit visitors to travel to five places now instead of three and some businessmen will get multiple-entry visas, exempting them from reporting to the police.
Despite thousands of years of shared heritage, India and Pakistan have tense relations - a legacy of three wars since their independence from Britain in 1947.
The two governments agreed to relax visa rules in principle in September, when former Indian foreign minister SM Krishna visited Islamabad.
India is likely to issue up to 3,000 multi-city visas to Pakistani cricket fans and an additional 300 to VIPs for the cricket series that starts on Christmas day, allowing Pakistanis to cheer on their national team on Indian turf.
"This is a baby step towards reducing the tensions between India and Pakistan," said Ashok Mehta, a former major general of the Indian army. "But it's still significant, especially because nothing is happening on big-ticket items like border management and terrorism - the real ice-breakers."
Malik promised India that Pakistan would convict those responsible for the 2008 attacks.
"I assure the Indian authorities that we will not leave any stone unturned and the day is not far when you will see the conviction and you will see the justice done," he said.
(Editing by Frank Jack Daniel and Tom Pfeiffer)