People stroll past a sand sculpture of Indian Prime Minister-designate Narendra Modi (L) and Pakistan's Prime Minister Nawaz Sharif, created by Indian sand artist Sudarshan Patnaik on a beach in Puri, in the eastern Indian state of Odisha, May 25, 2014. Pakistan has accepted an invitation to Sharif to attend the inauguration of Indian Prime Minister-designate Modi, an official said on Saturday. The Pakistani premier's attendance will be a first in the history of the nuclear-armed rivals, which have fought three wars since independence in 1947. [Photo/Agencies]

Rights abuses

India has for years complained that Pakistan backs separatist militants who slip in from Pakistani-controlled Kashmir to stage attacks.

Pakistan says it only gives political support to the Muslim people of Kashmir, who it says face human rights abuses at the hands of Indian troops. India denies that.

The recent resumption of dialogue had offered the two countries an opportunity to find lasting peace and boost trade.

Modi, a Hindu nationalist leader, was elected by a landslide on promises to restore India's economic and military prowess and meet the security challenge posed by long-running tension with Pakistan.

Yet he surprised many observers by inviting South Asian leaders - including Sharif - to his inauguration in a bid to bolster neglected regional ties.

However, the new-found warmth in the ties between the two nations took a hit last week when Modi accused Pakistan of waging a "proxy war" by sending militants to attack India.

Since then, a spurt in violations of the ceasefire along the Line of Control, as well as on the international border, has only further soured relations.

India's decision to cancel the talks represents a blow to Sharif, who is trying to stave off a bid from opposition leader Imran Khan to unseat him.

Sharif has made improving relations with India a cornerstone of his policy, much to the chagrin of Pakistan's powerful military and security establishment which appears less keen to do so.