"Life before the ceasefire was terrible, just like hell," said Aziz as he basked in the winter sun in the alpine hamlet, located about 100 kilometers (60 miles) west of Kashmir's summer capital Srinagar.

"A single artillery shell used to shut down this town and the villages around," he said, recounting how people ducked into underground bunkers, spending hours and sometimes even days there.

"But thanks to Allah, it has changed."

The latest step in the peace process will come Saturday in Islamabad, when Indian Foreign Minister Pranab Mukherjee meets counterpart Khurshid Kasuri to invite Pakistan to a regional summit meeting in New Delhi this April.

The two are expected to see if they can finalise proposals to reduce troop levels in Kashmir to pave the way for a bilateral summit before the April meeting of the South Asian Association for Regional Cooperation (SAARC).

At stake is cementing the ceasefire on the border by ending a bitter standoff over control of Kashmir, a Himalayan state that both sides claim in full and have held in part since independence from British rule in 1947.

India and Pakistan have fought two wars over the region, and came close to a potentially cataclysmic conflict in the summer of 2002, mobilising hundreds of thousands of troops following an attack on New Delhi's parliament by Islamic militants in December 2001.

Having stepped back from the brink, the nuclear-armed rivals agreed on a plan for Kashmir in January 2004 when former Indian prime minister Atal Bihari Vajpayee met Pakistan's military ruler, President Pervez Musharraf.

The two agreed to a formula that would see Islamabad deny support to Islamic militants waging an insurgency in Kashmir while New Delhi would negotiate in good faith to find a peaceful end to the dispute.

For the residents of Uri, the pact has translated into the tending of orchards and a resumption of relatively normal daily life -- as normal as can be expected, given the thousands of troops, weapons and militants.

"Life is back to normal. People are working in their fields, attending to their walnut and pear orchards," says Bilkees Begum, who lost her house in a devastating October 2005 earthquake that killed more than 74,000 in Kashmir.

"Every day we pray for everlasting peace between India and Pakistan. The peace benefits us," she said.

The insurgency against Indian rule waged by Islamic militants since 1989 has claimed more than 44,000 lives by official count, and New Delhi alleges Pakistan still supports the militants. Islamabad denies the charge.

That refrain, however, has been softened in the past three years -- despite several extremist attacks in Kashmir and one in Mumbai in July 2006 that killed 187 as bombs exploded on packed commuter trains.

The two sides have managed to open the Line of Control to bus traffic, shared supplies after the 2005 quake and allowed a delegation of Kashmiri separatists to cross into the Pakistani zone to hold talks.

While many political analysts in both countries say the two sides are still far apart, hope is a bit higher along the ceasefire line.

"I am optimistic India and Pakistan will resolve the dispute over Kashmir and we will live a peaceful life," said retired government employee Bashir Mir, as he huddled around a kangri, a clay pot heater covered by wicker and filled with hot charcoal.

"After the ceasefire, we feel like we have been released from prison," the bearded 59-year-old said.

Uri is just a few miles from the snow-covered mountains that represent the frontline with fortified bunkers, army camps and signs that warn of everything from explosives to armed guards.

The tension before the ceasefire made even a walk along the meadow to tend livestock a major undertaking, but now building is in progress.

"I am out building this house only because of the ceasefire," said Abdul Rashid, 60. "Earlier our main engagement was to save ourselves."

While the militaries no longer fire weapons at each other, India says militants backed by Pakistan continue their "jihad" against New Delhi, although at a lower level than before.

"The level of violence in terms of total number of people killed, has been coming down steadily from nine per day in 2002 to three per day in 2006," New Delhi's top representative in Kashmir, S.K. Sinha, told AFP.

He said though that while militants inside Kashmir were only half as strong as they once were, they still could execute high-profile acts of violence like car and suicide bombings.

Many Kashmiris continue to offer support for the rebellion as thousands of Indian troops and paramilitary patrol the Muslim-majority state and are accused of gross human rights abuses.

The charges, borne out mainly by hardline militants and separatists, have made rapprochement between New Delhi and Kashmiris problematic.

Many here still call for independence or alliance with Pakistan despite successful state elections in 2002 that brought a coalition government to power which promised to end police and troop abuses.

"There has to be a solution that meets our aspirations," says Mohammed Yusuf, a handicraft seller in Uri. "At this point it seems Pakistan is willing to concede but as far as India I don't think it is ready to change."

Meanwhile, Islamic militants have continued to call for armed struggle even as moderate separatists held several rounds of talks with New Delhi with a view toward a political settlement.

"The need of the hour is to launch a ceasefire in the hinterland, where people are suffering because of violence and subsequent security force actions," Tahir Mohiudin, a Kashmir analyst, told AFP.

"I don't think anything concrete is being done on that front," said Mohiudin, who edits the region's leading Urdu weekly "The Rock."

In Uri, residents said a good start would be to open the ceasefire line to locals.

"I should be able to cross that river and meet my relatives in the Pakistani portion of Kashmir," said Abrar Ahmed.

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