Home minister P Chidambaram said on Friday that Pakistan, which he termed the "global epicentre of terrorism", was promoting terror infrastructure as "state policy" against India.
"The vast infrastructure of terrorism in Pakistan has for long flourished as an instrument of state policy," Chidambaram said in his opening remarks at the first internal security dialogue between India and the US.
The home minister was speaking ahead of his talks with his American counterpart Janet Napolitano, who arrived in India on Tuesday.
Calling Pakistan the "global epicentre of terrorism", Chidambaram said, "It is a truism to say that India lives in perhaps the most difficult neighbourhood in the world. The global epicentre of terrorism is in our immediate western neighbourhood."
He said different terrorist groups, "operating from the safe havens in Pakistan", have left that country increasingly radicalised.
"Its economy has weakened and the state structure in Pakistan has become fragile. Today, Pakistan itself faces a major threat from the same forces. Its people as well as its state institutions are under attack."
The home minister's remarks come amid a spate of terror attacks in Pakistan, following the killing of al Qaeda chief Osama bin Laden who was living in a house near a top military academy in Abbotabad.
Chidambaram said the homeland security dialogue "is an important milestone in India-US relations and adds a very important dimension to the growing strategic partnership between our two countries".
The home minister said India was battling terrorist infiltration and fake currency inflow that "do not only take place through our western border, but is often routed through countries that we share open borders with".
"We also have to deal with the challenge of large scale migrations from across our borders. Insurgent groups have sometimes found refuge in our neighbouring countries. Internal instability in our neighbouring countries has a direct bearing on the population in our border states," he said.
He, however, added that India's "comprehensive neighbourhood strategy is based on political engagement, especially with Pakistan".
India, he said, "supports political stability; assistance for economic development and improved connectivity and market access for our neighbours to the Indian economy".
"A stable, peaceful and prosperous neighbourhood is vital for the security of the people of India," he added.