India will set up a panel of experts to determine whether to reduce troop numbers in Kashmir, the government said on Friday, after a fall in violence in the restive Himalayan region.
"The panel would be an expert and professional body intended to carry out an in-depth assessment of the situation," said a statement from the office of Prime Minister Manmohan Singh.
The prime minister has been under pressure from Mufti Mohammad Syed, the leader of a coalition ally in Jammu and Kashmir, who threatened to pull his party out from the state government if some of the roughly 500,000 troops were not withdrawn from the area.
India has around half a million troops in Kashmir battling a Muslim separatist insurgency. Officials say more than 42,000 people have been killed in the revolt since 1989. Human rights groups put the toll at about 60,000 dead or missing.
India pulled out a few thousands troops in early 2006 from Kashmir due to decreased levels of violence.
Syed, leader of the People's Democratic Party, said since violence in Kashmir had fallen since India and Pakistan began a peace process in 2004, some troops should leave the region.
Singh's Congress party, which heads the federal government, is the leading partner in the Kashmir coalition.
After a meeting between Singh and Syed on Friday, the government said the expert panel would be set up and headed by the defence secretary, the defence ministry's top bureaucrat.
"It would determine whether there is need to relocate and reconfigure security forces," Singh's office said.
The panel will include representatives from the ministry of home affairs, the army and the Kashmir government, but officials said there was no timeframe for it to complete its assessment.
The region, ruled partly by India and Pakistan but claimed by both in full, has caused two of their three wars.
Pakistan President Pervez Musharraf has pressed for the demilitarisation of Kashmir as a step towards a final solution to the neighbours' decades-old dispute over the region.
The Indian army, however, says it is too early to withdraw troops, warning it could play into the hands of militants who, it claims, are backed by Pakistan.
In New Delhi, Syed told reporters he was satisfied with the government's move to set up a panel.
"The concerns have been resolved in a dignified and gracious manner," he said.
The decision to set up an expert panel comes days ahead of meeting of leaders of South Asian nations in New Delhi.
New Delhi has also set up a committee to review the Armed Forces (Special Powers) Act, a controversial law which gives the army sweeping powers to arrest suspects without charge.
Human rights groups accuse Indian troops of widespread rights violations. The army says cases of abuse are isolated acts and it prosecutes any soldier found guilty of human rights violations.