India and Pakistan on Wednesday agreed that 'effective and sustained' measures would be taken to combat terrorism and fugitives.

A statement issued in New Delhi after talks between Home Secretary Madhukar Gupta with his Pakistan counterpart Syed Kamal Shah, said: 'It was agreed that terrorists and criminals in either countries would be effectively dealt with.'

The two countries will also free all fishermen and prisoners in each other's custody who have completed their sentences by August 14-15 when the two neighbours observe their Independence Day.

It was agreed that cooperation would be enhanced between CBI and its Pakistani counterpart Federal Investigation Agency in the areas of human trafficking, illegal immigration and counterfeit currency.

The nodal points in both the agencies will meet periodically to facilitate early disposal of Interpol related cases.

Shah cut short his visit and left for Islamabad early Wednesday morning in the wake of bloody clashes between militant students and security forces at Lal Masjid in Pakistan's capital Islamabad.

The two sides decided to free fishermen in each other's custody 'on completion of due process' and initiate immediate steps to release fishing boats, excluding trawlers, which had strayed into their territorial waters.

Ahead of the talks, New Delhi freed 43 Pakistani prisoners and Islamabad reciprocated by releasing 50 Indian fishermen.

The 12-point joint statement said that both sides welcomed the release of prisoners and fishermen by each other on the eve of the talks as a 'gesture of goodwill and on humane considerations.'

The statement said the two sides agreed that prisoners, who have been granted consular access, whose national status has been verified and who have completed their prison sentences, would be released by August 14-15.

Pakistan celebrates its Independence Day on August 14, a day ahead of India.

It was agreed that immediate steps would be taken by either side to reconcile their numbers to facilitate their early release on completion of necessary formalities.

Both sides agreed that the recently formed committee on prisoners, comprising eminent retired judges from the two countries, is a useful instrument to facilitate release and repatriation of prisoners who have served their prison sentences.

It was decided that action would be initiated to hold two meetings -- one in India and the other in Pakistan -- within a period of three months by which time the necessary reconciliation of numbers of prisoners on both sides would have been completed.