Crisis deepens as India increases curbs on Pakistan

India took another step towards war with Pakistan last night when its Cabinet Committee on Security banned Pakistan International Airlines, the national carrier, from entering Indian airspace from 1 January.

The move shut down the last travel link between the south Asian neighbours. Last week, India announced the suspension of the skeletal bus and train services between them.

India also ordered Pakistan to cut 50 per cent of approximately 110 staff from its high commission in Delhi, and declared that it would reduce its staff in Islamabad by the same amount. Soon after the Indian announcement, Pakistan reciprocated by banning Indian aircraft from its own airspace.

The sanctions follow India's announcement on Wednesday that it had deployed ballistic missiles on its Pakistan border and increased jet patrols. There have been reports of heavy troop build-ups on both sides of theborder as well as along the Line of Control, the de facto border between Indian and Pakistani-controlled Kashmir.

Tension between the states, which have nuclear arms and have already fought three full-scale wars since independence from Britain in 1947, rose sharply on 13 December when five terrorists launched a suicide assault on the Indian parliament building in Delhi. Fourteen people died, including all the gunmen. A car they were driving primed with explosives failed to detonate, and guards prevented them from entering the building. India blamed the attack on two militant groups based in Pakistan, Lashkar-e-Tayyiba and Jaish-e-Mohammed, which are fighting to end Indian rule in Kashmir, its only Muslim-majority state.

India demanded Pakistan take firm action against the two groups. Pakistan demanded proof of their involvement. After apparent pressure from the United States, Pakistan's military ruler, Pervez Musharraf, announced the seizure of assets of the groups and arrested one militant. India says, however, that the groups were given notice to move their money and that the militant was released 24 hours later.

Last night, Jaswant Singh, India's Foreign Minister, said Pakistan's moves were a "joke". He said to Pakistan: "If you have joined the international coalition against terrorism, please act in accordance with the principles that you have stated ... There is an increasing recognition by the international community that Pakistan has to act."

A Western diplomat in Delhi said: "What India wants to do is the same thing that the United States has done in Afghanistan. They want to go after a country they believe sponsors terrorists."

General Musharraf's problem – the latest of several grave challenges he has faced since 11 September – is that the struggle to "liberate" Kashmir from Indian is fundamental to Pakistan's national identity.

Pakistan insists that its support for the insurgents is only moral, but India believes it provides training, funds and equipment. Pakistan insists they are freedom fighters, not terrorists, but General Musharraf's hearty endorsement of President Bush's war on terrorism has made that fine distinction harder to uphold.

And so the feuding neighbours inch ever closer to war. India's problem is that military training camps in Pakistani-controlled Kashmir are, militarily, insignificant targets; while hitting anything bigger would prompt all-out war.

Looming over that possibility is the nuclear menace. When questioned on that subject yesterday, General Rashid Quereshi, Pakistan's presidential spokesman, did his best to reassure. "Pakistan and India are responsible nations," he said. "These are deterrents which are not meant to be more than that. It's something one should not even consider."