India on Tuesday decided to pull out of the South Asian Association for Regional Cooperation (SAARC) summit in Islamabad amid tensions with its neighbour following a deadly attack on its army base.

India's Ministry of External Affairs also said other association member states had conveyed reservations about attending the meeting in November.

Broadcaster NDTV, citing official sources, reported Afghanistan, Bangladesh and Bhutan also signalled they will not attend the meet, which could lead to the session being relocated.

"Increasing cross-border terrorist attacks in the region and growing interference in the internal affairs of member states by one country have created an environment that is not conducive to the successful holding" of the summit, ministry spokesman Vikas Swarup said.

"In the prevailing circumstances, the government of India is unable to participate in the proposed summit in Islamabad," he continued.

Premier Narendra Modi was to lead the Indian delegation at the summit.

The move comes against the backdrop of increased tensions between the nuclear-armed neighbours after India blamed Pakistan-based militants for an attack on the army base in Jammu and Kashmir state this month in which 18 soldiers were killed.

India claims Pakistan aids and abets Islamist militants who carry out attacks in India - a charge Pakistan denies. The sides have fought three wars, two of them over the disputed Kashmir region.

India has gone on a diplomatic offensive against Pakistan, labelling it a "rogue nation."

On Monday, Modi reviewed the crucial Indus Waters Treaty, which divides resources from six rivers between India and Pakistan. According to government sources, Modi told the meeting that "blood and water can’t flow together."

Media reports said India will now use much more of its share of water, eating into the surplus that Pakistan was availing. Sartaj Aziz, Pakistan's advisor on foreign affairs, said if India pulled out of the treaty it would amount to an "act of war."

India is also planning to revoke the Most Favoured Nation status to Pakistan in trade and Modi is to hold a meeting on the issue on Thursday.

SAARC, a group founded in 1985 to foster regional cooperation, has often been marred by tensions between Pakistan and India.

In 1999, India cancelled a SAARC summit following a major conflict with Pakistan in the Kargil region in Kashmir. India, Pakistan, the Maldives, Bangladesh, Nepal, Afghanistan, Sri Lanka and Bhutan are member states.

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