India and Pakistan on Tuesday set up three sub-groups to go into contentious issues like terrorism and extradition and deportation of wanted criminals sheltering in each other's territory.

The groups will work out the nitty-gritty of establishing better cooperation in areas like countering terrorism, exchange of information on wanted criminals and drug trafficking, official sources said after the first day of two-day talks in Delhi between Home Secretary Madhukar Gupta and his Pakistani counterpart Syed Kamal Shah.

Though there was no official word on what these groups would be mandated to do, the sources said they had been entrusted with the task of finding ways and means for better cooperation between the two countries in tackling terrorism and drug trafficking.

Pakistan's Interior Secretary Shah told reporters that the talks had proceeded in a positive and conducive environment.

"We have formed three groups on different subjects.

"These groups will work on minute details of what we discussed in the morning so that the two countries can ensure better cooperation," he said.

While refusing to divulge what the groups were to discuss, Shah said, "They will work on different items... items which are purely in the public interest of both the countries."

The groups are expected to submit their reports on Wednesday after which the two countries will try and reach an understanding for effective cooperation in these fields, the sources said.

During the day-long delegation-level talks, the two sides decided on forming the sub-groups in view of the serious issues involved.

India also sought the early deportation of some prisoners in Pakistan. Before the talks, the Pakistan home secretary struck an optimistic note, saying: "Intentions are always good. We have always had a positive outcome whenever we have met."

"We will be able to discuss issues and finalise some details and (we) hope (for) a positive outcome on all issues of public interest," Shah said while replying to a question about the expectations of the Pakistani delegation.

Echoing similar views, Gupta hoped that the parleys would be "positive and fruitful", contribute to confidence-building measures and improve people-to-people contacts.

During the deliberations, India conveyed to Pakistan its concerns on stepped up cross-border terrorism and sought an assurance on the dismantling of the terror infrastructure.

Assurances by Pakistan about not allowing its soil to be used by terror groups are viewed skeptically by the government, which has bluntly told Islamabad that the terror infrastructure, including training camps and communication networks, continued to function with impunity.

The two sides will also discuss draft agreements on relaxing visa rules and steps to check drug trafficking.