Kashmir Singh was arrested in the city of Rawalpindi in 1973 while trying to smuggle goods from Pakistan to India, and was sentenced to death by a military court.

Escorted by Pakistani Human Rights Minister Ansar Burney, who played a key role in his release, Singh walked home a free man through Wagah, the main crossing on the border that links Pakistan's eastern city of Lahore with Amritsar in India.

Hundreds of people along with his wife and sons, whom he last saw as toddlers, gathered at the land border crossing in the northern state of Punjab to receive him.

He also has a daughter and grandchildren who are expected to meet him in his home village in Punjab later on Tuesday.

"I am very, very happy and will escort him back to a gurdwara to pray," his wife Paramjeet Singh told reporters at Wagah.

Singh's appeal against his death sentence was lost for decades among Pakistan's thousands of death cell convicts until he was spotted by a local human rights group last December and a fresh plea for mercy was filed.

He was released from prison in Lahore on Monday.

Singh, a short, balding man with a white stubble, waved as he emerged from a bus, looking overwhelmed. Pakistani officials garlanded him, gave him sweets and hugged him before he crossed over into India.

After his release on Monday, the policeman-turned-trader said he was not a spy.

"I am laughing now and I don't remember the last time I laughed like this," Singh, said to be in his early 60s, told reporters in Lahore.

"I am not dead. Hope had kept me alive and I want to go back to my village in Punjab."

Pakistan and India, both nuclear-armed, have fought three wars since winning independence from Britain in 1947 and nearly went to war again in 2002.

Their relations have improved considerably since they launched a peace process in 2004 but they routinely arrest one anothers' nationals who stray across land or sea borders.