The March 3-11 "Made in Pakistan" fair is aimed at allaying concerns that a South Asian free trade zone would lead to Indian goods swamping Pakistani markets, the Press Trust of India news agency reported.

The step comes on the back of new peace moves between the neighbours who have fought three wars and came to the brink of a fourth conflict in 2002.

In January, the seven-nation South Asian Association for Regional Cooperation or SAARC agreed to create a free trade area embracing Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.

"There's an apprehension, a fear in the minds of our Pakistani counterparts, that Indian goods would flood their markets," said Y.K. Modi, one of the fair's organisers. "This exhibition is to make them comfortable and confident."

The fair will have 100 stalls exhibiting Pakistani handicrafts, fashion garments, melamine products, glassware, pharmaceutical and consumer goods.

Modi said it would help "create a niche market for Pakistani products in India," but said goods would have to be high quality and priced competitively "because there's stiff competition in the domestic market."