"The trajectory of our relationship over the last few decades has been distorted and adversely impacted by the factor of cross-border terrorism," Rao told a large gathering at the International Institute for Strategic Studies here.
Describing the recent talks with her Pakistani counterpart Salman Bashir in Islamabad as "productive and positive", she said, "A stable Pakistan which acts as a bulwark against terrorism and extremism is in its own interest and also in the interest of our region."
"We have consistently made efforts to go back to the negotiating table to solve difficult issues. We have striven to promote better relations with Pakistan. Naturally, such relations can only grow in an atmosphere free of terror and violence," she said yesterday.
Referring to China, Rao said: "We have consciously practised a policy of engagement that has yielded positive dividends. Although, there is an unresolved boundary question which should be settled on mutually acceptable terms, we have not held the rest of the relationship hostage to this complex issue. We have also collaborated on a variety of multilateral issues."
Speaking on `Key Priorities for India`s Foreign Policy`, Rao said: "it is an amalgam of national interests, our conviction that inclusive structures of dialogue and cooperation to address the new dimensions of security threats are necessary, that the institutions of global governance including the United Nations should reflect current realities."