"India wants talks with Pakistan but the present development (release of Lakhvi) is unfortunate and disappointing," he told reporters on the sidelines of a function here.
"Such decisions affect mutual relations between two countries," he said.
He was reacting to the Lahore High Court's judgement suspending the detention of 55-year-old Lakhvi under Maintenance of Public Order after the Pakistan government failed to present sensitive records against him in the court.
He said Jammu and Kashmir government has initiated land acquisition process for their rehabilitation.
On the killing of five undertrials, who were allegedly associated with SIMI and other radical groups, in police custody in Nalgonda district in Telangana, he evaded a direct reply, saying, the matter was a state subject.