During the first day of talks, sources said that no major decision was taken.
In the first phase, the two sides reviewed the contentious issues and decided to adopt joint strategy for curbing terrorism and drug trafficking.
Interior Secretary Tariq Mehmood led the Pakistani delegation, while Home Secretary Dhirendra Singh headed the Indian side.
Interior Additional Secretary Abdul Rauf Chaudhry, Crisis Management Cell Director General Brigadier Javed Iqbal Cheema, Punjab Rangers Director General Major General Hussain Mehdi, Anti-Narcotics Force Director General Major General Nadeem and Indian Ambassador in Pakistan were also present on the occasion to assist their respective delegations.
Strict security measures were taken in and around the Interior Ministry's 'R' Block, Pak-Secretariat.
The contingents of Islamabad Capital Territory Police and personnel of secret agencies, including police/rangers commandos were deployed in the surroundings of the ministry and on roads leading to the venue of the talks.
The final round of talks would be held on Wednesday at 10:00 am.
The two sides have discussed all the issues in cordial and candid atmosphere. Pak-India talks are being held after a period of five years due to tension between the two countries followed by terrorist attack on Indian Parliament.
Sources told Business Recorder that both the sides would devise a joint strategy on Wednesday to curb terrorism and smuggling.
AFP adds: The talks are part of the step-by-step dialogue process addressing an eight-point agenda agreed on in July.
"They had a substantive session today in which they discussed all issues related to terrorism and drug trafficking," foreign ministry spokesman Masood Khan told AFP.
"They shared their respective perception on the issues."
The issue of terrorism is one of the most sensitive between the nuclear-armed neighbours. India has frequently accused Pakistan of sponsoring "terrorism" in occupied Kashmir.
Pakistan denies backing the Kashmiri Mujahideen, saying it only offers moral support, and calls them "freedom fighters" battling a violent oppressor.