India has no problem talking to Pakistan but it has a problem talking to 'Terroristan', external affairs minister S. Jaishankar said in New York, asserting that Islamabad has created an entire industry of terrorism to deal with the Kashmir issue.

Jaishankar, addressing a New York audience at cultural organisation Asia Society on Tuesday, said when India decided to revoke Article 370 and bifurcate the state of Jammu and Kashmir into two union territories of Jammu and Kashmir and Ladakh, it drew a reaction from Pakistan and China.

Pakistan downgraded diplomatic relations with India and also expelled Indian high commissioner.

China had voiced 'serious concern' over the situation in Kashmir, saying 'the parties concerned should exercise restraint and act with caution, especially to avoid actions that unilaterally change the status quo and exacerbate tension.'

Jaishankar emphasized that India has no problem talking to Pakistan.

'But we have a problem talking to Terroristan. And they have to be one and not be the other,' he said.

Jaishankar underlined that revoking Article 370 has no implications for India's external boundaries.

'We are sort of reformatting this within our existing boundaries. It obviously drew a reaction from Pakistan, and it drew a reaction from China. These are two very different reactions. I think, for Pakistan, it was a country which has really created an entire industry of terrorism to deal with the Kashmir issue. In my view, it's actually bigger than Kashmir, I think they have created it for India,' Jaishankar said.

He added that in the aftermath of India's decision to scrap Jammu and Kashmir's special status, Pakistan now sees its investment of 70 years undercut if this policy succeeds.

'So theirs is today a reaction of anger, of frustration in many ways, because you have built an entire industry over a long period of time,' he said.

When asked that Pakistan has said a lot and what does he think it would do, Jaishankar said this is not a Kashmir issue but a bigger issue than that and Pakistan has to accept that the model which they have built for themselves, no longer works.

'That you cannot, in this day and age, conduct policy using terrorism as a legitimate instrument of statecraft. I think that's at the heart of the issue,' the external affairs minister said.

Jaishankar recalled that over the years in Jammu and Kashmir, lack of development and opportunity created a sense of alienation, and that alienation lead to separatism, which lead to terrorism.

When asked what Pakistan needs to do as a precondition for Kashmir talks, Jaishankar said, 'I think we are getting this wrong. First of all Pakistan has to do something for its own good and if it does that, it would enable a normal neighbourly relationship with India.'

He added that it is not like India and Pakistan agree on everything else or that the two countries have wonderful relationship, and then there is Kashmir issue.

'We had an attack on Mumbai city. The last time I checked, Mumbai city was not a part of Kashmir. So if Pakistani terrorists can attack states and regions, which are far removed from Kashmir, we have got to recognize that there is a bigger problem out there,' the minister said.

The problem is really the mindset, he said, adding that every time there is a change of government in Pakistan, 'somebody says its new and nothing to do with the earlier guys' and blames the previous government.

'Second, they say, 'it has nothing to do with us as a country, it's all the Americans. The Americans taught us the bad habits by doing the Afghan jihad. We were good people till you came along'', he said, taking a strong jibe at Pakistan.

There is a fundamental issue there which they need to understand and we need to encourage them to do – that is to move away from terrorism, he said, adding that at one level it's a huge issue and another level it's a very obvious issue.

'These are not activities which are subterranean. These are activities in broad day light. They know where the camps are,' said the minister adding that anyone can know where the camps are just by googling them.

Jaishankar emphasized that the provision in the Indian Constitution, which gave Kashmir a different status was a temporary provision.

'Now, here's the funny thing. We rarely read that in the international press. We agree on what the word temporary means, it means something comes to an end. After 70 years, it came to an end. And 70 years is a decent definition of the word temporary,' he said.

He said when the Narendra Modi government was voted back into power, it took a long hard look at what its options are about Article 370 in Jammu and Kashmir.

'And the options were either we do more of the same knowing it doesn't work, or we do something different. So I think the choice was okay. We will do something different. And that something different, by the way, has no implications for the external boundaries of India,' he said.

On China, he said Beijing misread what was happening in Jammu and Kashmir after the revocation of Article 370.

Now, I don't know why they believe that it impacted on them, he said, adding that he went to Beijing a few days after the Constitutional change and explained to them that as far as they were concerned, nothing had changed.

'India's boundaries had not changed, and the line of actual control has not changed. So that was the conversation we had with them,' said Jaishankar.