Pakistan President Pervez Musharraf [Images] has said Islamabad is ready to fight terror with India in Jammu and Kashmir [Images] if New Delhi agrees to withdraw troops from three insurgency-wracked districts.

'I propose one way of moving forward... Take three towns of the Valley -- Srinagar [Images], Kupwara and Baramulla. Let all military move out of the cities to the outskirts, and we ensure there is no militancy inside,' he said in an interview to Karan Thapar for CNN-IBN news channel.

'Pakistan will be with the Indian government and Kashmiris to ensure that there is total peace and tranquility in these three cities. Look at the comfort level it brings. It does not need any constitutional amendment. It just needs an administrative order,' he said.

• Complete Coverage: The Road to Peace

India immediately rejected the suggestion and said decisions on demilitarisation in its territory cannot be dictated by any other country.

''We have heard the remarks made by President Musharraf on demilitarisation, and this time, about three specific cities. I would like to say first of all, that any demilitarisation or redeployment of security forces within the territory of India is a sovereign decision of the Government of India and cannot be dictated by any foreign government,'' an External Affairs Ministry spokesman said at a briefing on Saturday night.

"Any such decision is based on our assessment of the security situation," he said, adding, "As long as the security situation in Jammu and Kashmir and, indeed, in other parts of the country is adversely affected by the phenomenon of cross-border terrorism and violence perpetrated by Pakistan-based terrorist groups, the Government of India will fulfill its responsibility to safeguard the lives and security of its citizens."

• PM rejects Musharraf's cricket diplomacy offer

"There seems to be some hint or a statement within the interview that there is a quid pro quo that if the towns of Srinagar, Kupwara and Baramullah are demilitarised, then President Musharraf would ensure that there is no militancy there. The problem is terrorism, and not mere militancy,'' the MEA spokesman said.

''The Pakistan president has repeatedly given solemn assurances that no part of the territory under Pakistan's control would be used for any cross-border terrorism against India. The implementation of this commitment is unconditional,'' he said, calling on Pakistan to 'implement forthwith its solemn commitments in this regard so that the peace process between the two countries can make progress and the two countries can live in peace and friendship as good neighbours.'