No decision was taken on the resumption of the composite dialogue that stalled after the 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.

This impression still persists in some quarters despite Manmohan Singh's explanations in parliament that India's decision to resume dialogue will depend on Pakistan's action against perpetrators of the Mumbai terror attacks and the larger anti-India infrastructure on Pakistani soil.

'People are missing the woods for the trees. We have brought the focus back on terrorism. And it's not limited to just Mumbai,' the source added.

New Delhi is closely watching steps taken by Islamabad to address India's terrorism related concerns, but is not very optimistic about any substantial action except for some token steps.

'They will perhaps catch a few people, firewall them from the big shots in Lashkar-e-Taiba (LeT) and from the establishment. It may not be 100 percent satisfactory,' the source said.

New Delhi is also thinking of moving beyond the format of the composite dialogue that has not prevented the deterioration in ties due to terror attacks.

'One of the reasons why the Jan 6, 2004 pledge by Pakistan not to allow its territory to be used against India was not included in the Sharm el-Sheikh joint statement was because it was turning out to be meaningless,' the source pointed out.

'There were attacks after attacks. We have to go beyond that,' the source added.

Manmohan Singh had told parliament that the form, timing and place of dialogue will depend on Pakistan's tangible steps against terrorism directed against India.