Visiting German Chancellor Angela Merkel and India's Prime Minister Manmohan Singh on Tuesday reviewed regional security and pledged to work together against terrorism and promote stability in South Asia.
The situation in Afghanistan with a projected withdrawal of NATO forces by 2014 and the efforts to engage with sections of the Taliban figured prominently in the talks between Merkel and Singh, the leaders said.
"We discussed the developments in Pakistan and Afghanistan. Terrorism is a serious challenge which will have to be fought on all fronts and not selectively," Singh told a news conference after the talks. He did not elaborate.
Merkel said Germany, which was hosting the next Afghanistan conference by the end of the year, would insist on reconciliation of all the forces in the war-torn country provided "they fulfill the condition of renouncing the use of force."
She said Afghanistan needed "an independent security architecture, which would be the best possible protection against terror attacks there."
Merkel also made a strong pitch on behalf of a European consortium for a multibillion-dollar deal to supply 126 fighter jets to India.
Germany is part of the consortium producing the Eurofighter Typhoon which is competing with the French made Rafale fighter for the $11 billion contract.
"We are convinced that we have the best product on offer," she told reporters.
Merkel is accompanied by seven German ministers for the first high-level consultations Tuesday with Singh and other Indian officials.
India and Germany hope to boost annual bilateral trade which currently stands at around $21 billion to $29 billion by 2012.
India is looking for investments and technology transfers to power its fast-paced economic growth while Germany is seeking to tap into India's booming market.
Officials from the two sides also signed four agreements for cooperation in science and technology, nuclear physics, vocational education and training, and medical research.