Telling Pakistan that the path to peace is a "two-way street", Prime Minister Narendra Modi said Islamabad needs to remove the "self-imposed" obstacle of terrorism which is coming in the way of Indo-Pak friendship.
Modi also asked Pakistan to play its part by putting a complete stop to any kind of support to terrorism - "whether state or non-state".
"In my view, our ties can truly scale great heights once Pakistan removes the self-imposed obstacle of terrorism in the path of our relationship.
"We are ready to take the first step, but the path to peace is a two-way street," Modi told The Wall Street Journal, in comments posted on its website today.
He said he has always maintained that instead of fighting with each other, India and Pakistan should together fight against poverty.
"Naturally we expect Pakistan to play its part," he said.
"But, there can be no compromise on terrorism. It can only be stopped if all support to terrorism, whether state or non-state, is completely stopped.
"Pakistan's failure to take effective action in punishing the perpetrators of terror attacks limits the forward progress in our ties," said the Prime Minister.
Modi said his government's proactive agenda for a peaceful and prosperous neighbourhood began from the very first day of his government.
"I have said that the future that I wish for India is the future that I dream for my neighbours. My visit to Lahore was a clear projection of this belief," he said.
Ruling out a change in India's decades-old policy of non-alignment, Modi said that despite the border dispute, there have been no clashes with China, pointing out the "new way" in today's "interdependent world" unlike the last century.
"There is no reason to change India's non-alignment policy that is a legacy and has been in place. But this is true that today, unlike before, India is not standing in a corner. It is the world's largest democracy and fastest growing economy.
"We are acutely conscious of our responsibilities both in the region and internationally," he said.
Modi's significant comment on India's Non-Aligned Movement (NAM), which many now also prefer to call as strategic autonomy, came in response to a question on China's assertiveness.
"The US is very keen on India, the rising power that India is, to be part of, if not an alliance, then at least a grouping that can stand up to some extent to China. Where do you see India taking a position on the global stage?" he was asked.