The report says there has still been no explanation for the large cache of arms and ammunition bound for the northeastern India and detected in Chittagong in April 2004.

Bangladesh has remained "indifferent" to the rising influence of political parties and organisations of "fundamentalist and radical Islamist orientation" in its society and government, the report released on Monday notes.

It, however, said Bhutan and Myanmar showed "exemplary good neighbourliness" by refusing sanctuary to anti-India insurgent groups.

On Nepal, the report said the imposition of the emergency, arrest of political leaders and press censorship led to a further deterioration of the security situation.

The defence ministry report says India's extended neighbourhood is uneasy because of internal instability, authoritarian or military rule, extremist political or religious movements, weak state structures and insurgencies.

As a result, "at its widest level, with some variations for better or worse, India's strategic environment remained largely unchanged", it observes.

Despite operations against al-Qaeda and the Taliban on Pakistan-Afghanistan border, the principal threats to peace and stability in the region remained the combination of fundamentalism and terrorism nurtured in 'madrasas' and training camps in the area and the danger of proliferation of weapons of mass destruction and access to them by fundamentalists and militants, according to the report.

The report says India's overall security concerns, despite the positive developments in relations with China and Pakistan, have remained "basically the same."

China and India maintained peace and tranquility along the border and stepped up efforts to address differences on the boundary issue through talks. However, China's close defence relationship with and military assistance to Pakistan continued, it notes.