Home Minister Rajnath Singh, who is here on a three-day visit, made the remarks during his meeting with Bahraini Interior Minister Rashid bin Abdullah Al Khalifa.
Singh also called on Bahrain King Hamad bin Isa bin Salman Al Khalifa and Crown Prince Salman bin Hamad Al Khalifa and shared with them India's concern over terrorism.
"We shared concern over terrorism and human trafficking," Singh tweeted after the meetings.
Singh apprised Rashid about Islamabad's open support and participation to glorify slain Hizbul Mujahideen militant Burhan Wani in Pakistan, saying it indicates continued free movement that terrorists and their supporters enjoy there.
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Wani was killed in an encounter on July 8 and since then the unrest has been continuing in Kashmir Valley.
"Pakistan is a country which refuses to give up use of terrorism as an instrument of state policy," Singh is said to have conveyed to his Bahraini counterpart.
He raised the issue of the arrest in July of Pakistani terrorist Bahadur Ali, who was armed and trained in LeT camps and then exfiltrated into Jammu and Kashmir with instructions to mingle in crowds for throwing grenades at security forces.
Asserting that Jammu and Kashmir is an internal matter of India and no interference is acceptable, he said the central government as well as the Jammu and Kashmir government and other relevant authorities in India are involved in addressing the situation in the state and various efforts have been undertaken to redress the grievances of the local population.
He conveyed that there is complete political consensus in India on reaching out to the people of Jammu and Kashmir and substantial progress has been made in this regard.
"It betrays Pakistan's selective approach to terrorism. We have conveyed to Pakistan that we are ready to discuss various aspects of the challenge of terrorism that is directed from Pakistan against us, which has been our core concern and is at the centre of the current situation in Jammu and Kashmir," he is believed to have said.
The two leaders rejected the linking of terrorism to any race, religion or culture.
The Home Minister also met Bahrain's Deputy Prime
Addressing the Indian community last night, Singh said terrorism is a global problem and the international community must join hands to root out the menace.
Singh had also said the Narendra Modi government has made several structural and procedural changes and that resulted in successfully reducing the "wholesale corruption" in India.
The Home Minister said both India and Bahrain are vulnerable to the scourge of terrorism and there were extensive discussions about the menace during his talks with Interior Minister of Bahrain.
Expressing his concern over the terrorism, Singh said terrorism constitutes the greatest threat to humanity since World War II and there are no good or bad terrorists.
He thanked the Bahraini leadership for condemning the recent terrorist attack in Uri in September and the Pathankot airbase attack in January this year, an official release said.
He said it is a matter of satisfaction that the world opinion is with India in its resolution to dismantle the launching pads of terrorism from across the border.
Singh expressed happiness over the fact that the bilateral security dialogue at the Deputy NSA level has now been institutionalised and the second round was held in New Delhi last week.
He said India would like to enhance ties with Bahraini defence and security establishment.
Singh said India is keen to strengthen trade and investment ties with Bahrain and avail of the strategic location of Bahrain as a "gateway" to the GCC market.
"While our bilateral trade is healthy and has reached about USD one billion, there is still a huge potential to further expand it," the release said.
He thanked the Bahraini authorities for launching the 'Little India in Bahrain'. This is a praiseworthy gesture towards India and Indian community and will promote Indian culture in Bahrain, he said.
Singh said Bahrain had supported India on many occasions and India will reciprocate in the same manner, more than what Bahrain has given to India.