India's strong reaction came a day after the Chinese foreign ministry spokesperson said China was willing to play a "constructive role" in improving Indo-Pak ties, especially after the increased hostility along the Line of Control (LoC).
He also said the situation in Kashmir has attracted "international" attention.
"At the heart of the matter is really the issue of cross- border terrorism perpetrated on India including on the people of the state of J&K. So, the matter is that cross-border terrorism in our region emanating from a particular source is threatening peace and stability in not only India but other neighbours," External Affairs Ministry Spokesperson Gopal Baglay told reporters.
"We have been ready to have dialogue with Pakistan among other issues (including) J&K in a bilateral framework. That position of addressing all issues with Pakistan including the Kashmir issue in a bilateral framework has not changed," he Baglay said.
He also strongly rejected allegations by Pakistan that India was using chemical weapons in Kashmir, saying India is against the use of chemical weapon anywhere by anyone in any situation.
Baglay hit out at the Pakistan government for "reading" from Lashkar-e-Taiba's terror script in glorifying Hizbul militant Burhan Wani, who was killed by security forces in July last year.