New Delhi, July 24 - India has taken 'half a step' of starting a 'limited dialogue' with Pakistan at the level of foreign secretaries, but has made it clear that the future of dialogue in any form will depend upon Islamabad's action against terrorism.

India has also indicated that it is ready to discuss the issue of Balochistan with Pakistan if it wants to bring up its 'internal issue' in bilateral talks.

'India has started a limited dialogue process at the level of foreign secretaries. But it will depend upon Pakistan's action against terrorism. That's the crucial issue,' a source familiar with government thinking said.

Dispelling the perception in some sections of the media and political establishment that India had compromised on its stand vis-a-vis Pakistan as reflected in the India-Pakistan joint statement at Sharm el-Sheikh, sources pointed out that perhaps the statement could have been better drafted by officials - a point already acknowledged by Foreign Secretary Shivshankar Menon recently - but it has in fact strengthened India's stand on terrorism.

'What counts is the purpose and the intention and not words and that intention is quite clear,' the source said.

Prime Minister Manmohan Singh and his Pakistani counterpart Yousaf Raza Gilani held talks on the sidelines of the Non-Aligned Movement (NAM) summit at Sharm el-Sheikh in Egypt July 16 and decided to start limited dialogue at the level of foreign secretaries that will focus on terrorism.

No decision was taken on the resumption of the composite dialogue that stalled after the Nov 26 Mumbai terrorist attacks.

The foreign ministers of the two countries will now meet on the sidelines of the United Nations General Assembly (UNGA) in New York in September.

The joint statement that delinks action on terror from the composite dialogue process and includes a mention of Balochistan has been criticised by the opposition Bharatiya Janata Party (BJP) and some experts as 'capitulation' and 'surrender' that has allegedly diluted India's position on terrorism.