The Defence Ministry annual report for 2014-15 released here also sounded an alarm over increasing Chinese activities in the Indian Ocean region even as it called for peaceful resolution to territorial disputes in the South China Sea.
"Pakistan continues to remain home to several non-state actors with North Western Frontier Province (NWFP) serving as the fountainhead for terrorist activities in the region," the report said accusing Pakistan of being "selective" in tackling terror.

Pakistan has renamed NWFP as Khyber Pakhtunkhwa but Indian security establishment still used the older nomenclature.
Noting that Pakistan's quest for strategic depth in Afghanistan continues to drive its policy to support Taliban and its affiliates in Afghanistan, the report said expanding footprints of extremist and terror organisations in Pakistan and their linkages with terror activities in Jammu and Kashmir and rest of India poses a security challenge to India.
This the report said also has "severe ramifications" on bilateral ties and to the peace and security of the region. "The use of terrorism as an instrument of state policy has deep roots in Pakistan military establishment," it said noting that ceasefire violations and infiltration from across the border also continues unabated.
"India desires peaceful and cooperative ties with Pakistan. However, continued activities of terrorist organisations operating from Pakistani territory and territories under Pakistan's control are major obstacle and source of concern," said the chapter headlined "Security Environment".
India remains committed to resolving all outstanding issues with Pakistan through peaceful, bilateral dialogue on the basis of Simla Agreement and Lahore Declaration, it said.
It noted that India had during the meeting of DGMOs of both countries reiterated need for Pakistan to uphold the sanctity of LoC and IB and to stop cross LoC transgressions.

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