Indian External Affairs Minister S.M. Krishna said a meeting between Indian Prime Minister Manmohan Singh and his Pakistan counterpart Yusuf Raza Gilani "could not be ruled out" at a meeting of South Asian leaders in Bhutan's capital, Thimphu.
"All bilateral issues between India and Pakistan will be discussed as, and when, the prime ministers meet," Krishna is quoted as saying by the Press Trust of India.
Their meeting during the conference of the South Asian Association for Regional Cooperation could see a resumption of peace talks between India and Pakistan. The talks have been stalled since November 2008 in the aftermath of the terrorist attack in Mumbai that killed 166 people.
New Delhi has blamed the attacks on the Lashkar-e-Toiba militant group based in Pakistan. Before the terrorist attack, which was focused in and around Mumbai's luxury landmark hotel the Oberoi, which was also severely damaged, both countries had been discussing for around five years an easing of tensions over the disputed Kashmir region.
Krishna's comments follow those of Pakistan's Minister for Population Welfare Firdous Ashiq Awan who was on a trip to New Delhi last week. He said the two prime ministers should meet at the regional summit.
Thimphu, with a population of 100,000, has been gearing up for the 16th SAARC summit Wednesday and Thursday and the arrival of around 450 delegates including international observers from China, Japan, the European Union, Republic of Korea, United States, Australia, Mauritius and Iran.
The countries that founded SAARC in 1985 are India, Pakistan, Bhutan, Maldives, Nepal, Bangladesh and Sri Lanka. Afghanistan joined in 2007.
Bhutan has passed on holding the summit three times since the association was formed because it hasn't had the infrastructure for such meeting, a report on the Kuenselonline Internet news site said. The meetings will be in the government's National Assembly Hall.
SAARC summits have been noted as much for their unofficial meetings, such as might happen between India and Pakistan, as for their official gatherings and declarations, mostly on economic issues.
At the 12th SAARC Summit at Islamabad in Pakistan in January 2004, member states set up the South Asia Free Trade Agreement which came into effect in 2007. The goal is to gradually reduce duties among member states.
Last week Mumbai's Oberoi Hotel reopened after a total refurbishment costing $35 million.
During the 2008 terrorist attack gunmen rampaged through the hotel, firing indiscriminately and setting off explosions in many rooms. Among the dead were more than 30 hotel staff and guests.