NEW DELHI, Oct 18: India on Wednesday signalled a tough stance towards the delayed foreign secretary-level talks with Pakistan next month with Prime Minister Manmohan Singh declaring that Islamabad was now on notice over terrorism.

Defence Minister Pranab Mukherjee addressing Indian military commanders with the prime minister in New Delhi, went a step further, saying that Pakistan’s “internal situation” had deteriorated to the extent of threatening regional peace.

“We have put Pakistan on notice that any democratic government of India would find it difficult to continue on the present path of addressing all outstanding issues unless the Government of Pakistan clearly deal with the issue of terrorism,” the prime minister told senior officers of the three services. “The India-Pakistan Anti-Terrorism Institutional Mechanism will be a test of Pakistani intentions and capabilities to implement the assurances that they have given us since January 2004,” he said.

In his assessment of the current threat perceptions, Mr Mukherjee voiced concern at the “marked deterioration in the internal situation of Pakistan, which has serious implications on overall stability and peace in the region”.

He said: “There is no apparent change in Pakistan’s intent to support Cross-border terrorism not only in Jammu & Kashmir but also in other parts of the country despite our best efforts to improve relations with Islamabad.” In his comments, Mr Mukherjee described Islamabad’s efforts against terrorism as cosmetic. “Occasional restrictions placed on terrorist groups by Pakistan remain cosmetic and reversible. Terrorist training and communication infrastructure in Pakistan and Pakistan Occupied Kashmir are intact,” Mr Mukherjee said. He, however added that a number of confidence building measures with Pakistan have been put in place and the peace process which is gradually moving forward may pick up momentum as a result of the recent apex level initiative on the sidelines of the NAM Summit in Havana.

The Indian prime minister described the situation in South Asia in as serious. “Reorienting our strategic thought to deal with this complexity and to ensure our core national interests is a major challenge that faces us all. In concrete terms it must express itself in a re-working of our relations with the major powers and in our immediate neighbourhood,” he declared.

India needs a peaceful and prosperous periphery, the prime minister said. “I have often said that the countries of South Asia have a shared destiny. We can, to an extent, help create such thinking by giving our neighbours greater stake in our economic prosperity. We must be willing to make necessary adjustments in our domestic policies to accommodate this,” Dr Singh said.

“The fact, however, is that we live in a dangerous and unstable neighbourhood. Within the subcontinent itself, we face problems of uneven development and its consequences. We cannot afford to see states fail. Political stability and a focus on human development in the region are in our strategic interest,” the prime minister said. If India’s economy grows as planned there would be more money for the defence forces. He also brought up the alleged role of the external factor in the Mumbai train blasts

“If our economy continues to grow I am confident we can find the means to meet the needs of our armed forces for equipment and other purposes. If our interests have grown so have the means available to us. Internal security is today a larger concern for us than direct external threats. In fact, the most virulent manifestation of the major external threat that we face is in its internal forms, as we saw in Mumbai in July,” Dr Singh said.