Pakistan Prime Minister Imran Khan has pledged to release a captured Indian fighter pilot in a beat to de-escalate the heightened military tensions between the two countries.

“As a peace gesture we are releasing the Indian pilot tomorrow (Friday),” Mr Khan announced in Pakistani parliament late Thursday.

Mr Khan emphasised that Pakistan and India “have to live in peace”.

Indian Air Force officials responded by saying they were “extremely happy” that Pakistan had decided to return one of its captured pilots.

The pilot, identified by Islamabad as Wing Commander Abhinandan, became the human face of the latest flare-up following the release of videos showing him being captured and later held in custody.

Mr Khan has already called for talks with India to prevent the risk of a “miscalculation” between their nuclear-armed militaries.

Soldiers stand next to the wreckage of an Indian fighter jet shot down in Pakistan-controlled Kashmir near the Line of Control. Photo: Getty

Australia, the US, China and other world powers have urged restraint from the two nations as tensions escalate following tit-for-tat airstrikes in the wake of a suicide car bombing that killed at least 40 Indian paramilitary police in Indian-controlled Kashmir on February 14.

Indian and Pakistani troops traded fire along the contested border in Kashmir on Thursday, but speaking at a press conference, Mr Trump said the US had been mediating between the two sides.

“They have been going at it and we have been involved in trying to have them stop,” US President Donald Trump said Thursday in Hanoi, where he was attending a summit with North Korea’s leader.

“We have been in the middle trying to help them both out.”

India’s Prime Minister Narendra Modi, who faces a general election in a matter of months, earlier told a rally of supporters that India would unite against its enemies.

“The world is observing our collective will. It is necessary that we shouldn’t do anything that allows our enemy to raise a finger at us,” he said, in his first remarks since the downing of planes on Wednesday.

Pakistan and India have fought three wars since independence from British colonial rule in 1947, two over Kashmir, and went to the brink of a fourth in 2002 after a Pakistani militant attack on India’s parliament.

Pakistan has shut its airspace, forcing commercial airlines to reroute. Thai Airways International announced on Thursday that it had cancelled flights to Pakistan and Europe, which left thousands of passengers stranded in Bangkok.

As Mr Trump was speaking, India said Pakistan fired mortars into Indian-occupied territory.

Troops from India and Pakistan also exchanged fire for over an hour in the Poonch district at 6 am, according to a statement from the Indian army.

On Wednesday evening India’s foreign ministry handed a dossier to Pakistan that it claimed detailed camps of the Pakistan-based militant group that carried out the February 14 attack.

With a general election due in India by May, an upsurge in nationalism from any conflict with Pakistan could become a key factor, potentially favouring Modi’s Hindu nationalist Bharatiya Janata Party.

The United States, Britain and France proposed the United Nations Security Council blacklist Masood Azhar, the head of Pakistan-based Jaish-e-Mohammad, the group that claimed responsibility for the attack.
China is likely to be oppose the move.

-With AAP