Pakistan will allow limited imports of sugar, cotton, and wheat from India in a bid to rein in rampant inflation, signaling a further thaw in relations between the two arch-foes.

The government said late Wednesday that permits would be granted for the import of half a million tons of sugar, a move expected to slash the price of the commodity by up to 20 percent ahead of the forthcoming fasting month of Ramadan, when consumption soars. Three million tons of wheat would also be allowed to be brought in, as well as unspecified quantities of cotton and yarn. 

Islamabad suspended trade and diplomatic ties with India in 2019 after New Delhi revoked the special status of the part of divided Kashmir that it rules. 

Both countries withdrew their top diplomats, and consular staff were expelled or withdrawn.

There has been a frosty standoff since, but signs of rapprochement recently have included Indian Prime Minister Narendra Modi and his Pakistani counterpart Imran Khan exchanging letters, as well as a resumption of talks last week on the use of resources from their shared Indus River.

Bloomberg reported last week that the United Arab Emirates had brokered secret back-channel talks between the two South Asian nations.

Asked at a news conference on Wednesday why the trade was resuming despite there being no change in New Delhi's position on Kashmir, Pakistan Finance Minister Hammad Azhar said the government had to make decisions "in the interest of the people."

Azhar took up his position on Tuesday after Khan sacked his predecessor for failing to check runaway inflation.

Meanwhile, the International Monetary Fund resumed its $6 billion bailout program with Pakistan, which was paused after the coronavirus outbreak, sending an installment of nearly $500 million this week.