Indian officials say there will be no peace talks between the leaders of India and Pakistan on the sidelines of this week's regional summit meeting in Nepal.
India's Prime Minister says he is willing to consider talks on Kashmir with Pakistan, but only if Islamabad sheds what he describes as its anti-India mentality and stops cross-border terrorism in the disputed territory.
In his traditional New Year's message carried in newspapers across India, Prime Minister Atal Behari Vajpayee said he would extend his hand of alliance to Pakistan and he would consider talks on Kashmir if Pakistan ends what he describes as cross-border terrorism in Kashmir.
Tensions between New Delhi and Islamabad have eased since Pakistani officials arrested a founder of Lashkar-e-Toiba on Sunday - one of two Kashmir separatist groups that India says was behind the December 13 attack on its parliament.
India blames Pakistan for supporting those behind the attack, a charge Pakistani officials strongly deny.
Meanwhile, Indian officials say separatist militants have killed at least five Hindu civilians in a remote village in Jammu and Kashmir State. They also say two soldiers were killed by separatist militants in a rare attack on an army camp in India's northern state of Punjab,which borders Kashmir.