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Indian External Affairs Minister Natwar Singh and his Pakistani counterpart, Khursheed Kasuri, announced the agreement after a meeting.
"The agreement entails that both countries provide each other advance notification of flight tests that it intends to undertake of any surface-to-surface ballistic missile," the Indian side said in a statement.
"India has now handed over a draft memorandum of understanding on measures to reduce the risks of accidental or unauthorized use of nuclear weapons under the control of both countries," the statement said.
Canada recently agreed to supply India with nuclear material for its civilian facilities — the first time since India set off a nuclear device with Canadian material in 1974.
After meeting with Singh, Canadian Foreign Affairs Minister Pierre Pettigrew said the two men agreed on nuclear safety co-operation, scientific and technical contacts on civilian atomic issues, and the supply of "dual-use items" to civilian nuclear facilities.
Pettigrew said the federal government was "impressed" by India's progress on nuclear issues, and that he hoped the country would sign the nuclear non-proliferation treaty.
India voted with Canada, the United States and the Europeans in condemning Iran for its nuclear activities, and in July, it took a number of steps in changing its own nuclear policies.
They included making a commitment to put the civilian nuclear facilities under international safeguards of the International Atomic Energy Agency and signing up to an additional protocol of the IAEA that commits India to greater transparency on civilian nuclear operations.
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