Mukherjee accused Pakistan of not doing enough to dismantle the "infrastructure for terrorism" in Pakistan-held Kashmir and challenged the neighbour to cooperate with India as it has done with the United States on the "war on terror."

The Himalayan state of Kashmir, divided between Pakistan and India and claimed by both in full, has caused two of three wars between the neighbours since their independence in 1947 from Britain.

India accuses Pakistan of sponsoring an Islamic rebellion in Kashmir but Islamabad denies the allegations and says it merely supports an indigenous freedom struggle by Kashmiris.

The rivals launched a peace process in January 2004 and since have restored road and air travel links and people-to-people contacts besides launching a bus service across the disputed borders in Kashmir.

"At the same time, we cannot still say for sure that the peace process is entrenched," said Mukherjee at a public forum in Washington on Monday while on an official visit to the United States.

"The infrastructure for terrorism in Pakistan and Pakistan-controlled territory, remains," he said. "We do not hear of operations like the ones being conducted by Pakistan, in cooperation with the US against the war on terrorism at its western frontiers, towards its eastern borders with India."

Washington relies heavily on Pakistan to stem terrorism along its western border with Afghanistan, particularly in efforts to nab Osama bin Laden, the mastermind of the September 11, 2001 terror attacks on the United States.

Mukherjee also referred to the restricted nature of trade and transport links with Pakistan to highlight uncertain peace prospects.

"More importantly from the point of view of our strategic interests, trade and transit with and through Pakistan remain highly circumscribed," he said.

"It is only when India and Pakistan resume direct, bilateral trade and transit, that there will be vested interest in peace in both countries," he added.

Mukherjee's remarks came amid what appeared to be a minor setback to the peace process following New Delhi's recent rejection of a request by Pakistani Information Minister Sheikh Rashid to travel to Indian-administered Kashmir on a new trans-Kashmir bus service.

The minister has been at the centre of a controversy since a leading separatist earlier this month praised his help during the early days of the Islamic militancy which exploded in the divided state in 1989.

Rashid, a Kashmiri, had said he wanted to cross on the next run of the bus service on June 30 to visit relatives in Indian Kashmir.

He would have been the first senior Islamabad official to make the trip.

Asked at the forum when Kashmir would be demilitarized, Mukherjee said, "As and when the situation improves, definitely there will be withdrawal of troops."

He said he hoped whatever initiatives taken by New Delhi were "adequately responded by the other side so that there is total peace."

Mukherjee also said that it "could be possible after another couple of rounds of meetings to have a constructive solution" to the India-Pakistan standoff on the Siachen glacier, the world's highest battlefield overlooking Pakistan and China.

During a visit to Siachen earlier this month, Indian Prime Minister Manmohan Singh called for the 6,300-metre (21,000-foot) glacier be turned into a "zone of peace" between India and Pakistan.

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