By Matthias Williams and Annie Banerji
NEW DELHI (Reuters) - From gourmet chefs to fashion houses showcasing muslin suits on the catwalk, Pakistan will unveil a trade fair in New Delhi on Thursday to reveal a soft side to traditional foe India as commercial ties between the nuclear-armed rivals begin to bloom.
Despite a combined population of 1.4 billion people and thousands of years of shared history and culture, cross-border trade between India and Pakistan is paltry - a legacy of three wars since their independence from Britain in 1947.
The show opens days after President Asif Ali Zardari made the first visit by a Pakistani head of state to India in seven years and it serves as the backdrop to talks between their trade ministers, who will open a border trade post on Friday.
Liberalizing heavily restricted trade and investment flows has become a driver of peace efforts between the neighbors whose fragile relations were shattered when Pakistani militants attacked the Indian city of Mumbai 2008.
"Terrorism should not take business hostage," said Tariq Puri, head of the Trade Development Authority of Pakistan which is organizing the trade fair.
"We are going to give you the soft image of Pakistan," he told Reuters in an interview.
"When you will enter the hall, you will feel good. You'll say 'OK, we had a totally different view about Pakistan, but here you see Pakistan so contemporary, so fashionable, so design-oriented'."
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Both sides have trumpeted the improving atmospherics since November 2008, when 10 Pakistani militants went on a killing spree in India's financial hub of Mumbai that left 166 dead and sparked fears of Indian military reprisals.
Ahead of the fair, an Indian government official talked proudly to Reuters of how India had granted visas to more than 600 Pakistanis to showcase anything from furniture to kebabs at the show, which runs until Saturday.
Among the expected visitors are tycoon Mian Mansha, listed by Forbes magazine as Pakistan's first billionaire, as well as Pakistani singers and film stars.
"A year ago, I would not have imagined that we would do such a big show in India," Puri said.
Less than one percent of India's merchandise exports are sold to Pakistan, in terms of dollar value, but in September the two sides pledged to double bilateral trade within three years to about $6 billion.
India welcomed a decision by Zardari's government, in the face of some domestic opposition, to grant India most favored nation status in November, which ended restrictions that require most products to move via a third country.
Pakistan expects its neighbor to reciprocate by liberalizing its visa regime for Pakistanis, as well as by slashing the bureaucratic red tape that strangles the sale of products from textiles to cement.
On Friday, Indian Trade Minister Anand Sharma and his Pakistani counterpart, Makhdoom Amin Fahim, will be on their common border at Wagah, between the Pakistani city of Lahore and India's Amritsar, to open a trade post.
This week, businesses are also hoping to strike a clutch of deals including one on Indian machinery to extract rice bran oil and another for India to export tea to Pakistan. For years, Kenya has been Pakistan's main supplier of tea.
Indian Prime Minister Manmohan Singh, whose government has been rocked by corruption scandals, has targeted lasting peace with Pakistan as a cornerstone of his political legacy.
But decades-old disputes, especially the fate of the divided Kashmir region, cast a shadow over talks. During his meeting with Zardari on Sunday, Singh pressed him to bring to justice the perpetrators of the Mumbai attacks.
Singh raised the continued freedom of Hafiz Saeed, the Pakistani Islamist suspected of masterminding the attack. India is furious Pakistan has not detained Saeed, despite handing over evidence against him.
(Editing by Robert Birsel)