India on Wednesday said the $4.16 billion Iran-India gas pipeline passing through Pakistan will have to be considered as a part of wider economic and trade cooperation between New Delhi and Islamabad.

"The project cannot be looked at in isolation," Petroleum Minister Mani Shankar Aiyar said after a 45-minute meeting with the visiting Pakistan Prime Minister Shaukat Aziz.

Aiyar said the wide economic and trade cooperation included Pakistan granting India the 'Most Favoured Nation' status and allowing New Delhi to use its territory as transit for sourcing gas from Central Asia. The gas pipeline project would provide Islamabad $600-800 million as transit fee.

"We did repeat what we have said earlier about using Pakistan as transit corridor (for sourcing gas from Iran) creating mutual dependency. We need to replicate such mutual dependency into several other sectors so that we can conceptualise cooperation in the hydrocarbon sector in the wider economic relationship between our countries," Aiyar said.

Aziz is believed to have insisted on going ahead with the project and that MFN status could be discussed as part of the political dialogue.

Pakistan foreign secretary Riyaz Khokkar said the Iran-India gas pipeline passing through Pakistan was "a major confidence building measure not just for the two countries but for the whole region, including Iran."