While the process would move forward in the direction charted by the outgoing government of Prime Minister Atal Behari Vajpayee and Islamabad, the conservative foreign policy of Singh's Congress party may slow it down, analysts said.
"We seek the most friendly relations with our neighbours, more so with Pakistan than with any other country," Singh said, days before the rivals hold talks on nuclear confidence-building measures as part of a peace roadmap agreed by Vajpayee.
"We must find ways and means to resolve all outstanding problems that have been a source of friction and the unfortunate history of our relations with Pakistan," said Singh.
"We should look to the future with hope. It is not impossible."
Islamabad welcomed Singh's comments and said they were positive and constructive.
"Pakistan also wants to work towards the creation of a stable and peaceful neighbourhood," Foreign Ministry spokesman Masood Khan told Reuters
"To achieve that objective, India and Pakistan must work hard to resolve disputes so that a salutary environment is created for improvement of relations between the two countries and for greater regional co-operation."
Separately, President Pervez Musharraf told a security conference that Pakistan seeks peace with India through the resolution of all disputes, including the "core dispute" of Kashmir.
"We are sincere in this effort," Musharraf said, adding that it would open up the vast mutually beneficial trade, commercial and economic potential of the South Asian region.
Pakistan had taken "bold initiatives" for regional peace, including reduction in the size of its army, and calling for nuclear-free South Asia, Musharraf added. "This underscores our desire for peace and economic development as a priority".