In its ''Report to People'', the UPA government said, it remains committed to a bilateral dialogue with Pakistan in an environment free of terrorism and violence and on the basis of Pakistan's solemn commitment that it will not allow territory under its control to be used for fomenting terrorism against India.
Speaking to journalists, Prime Minister Manmohan Singh said relationship with Pakistan was improving but cautioned it was prone to accidents.
"Our relations with Pakistan are improving. Recently there have been Home Secretary-level talks and other talks. It is a hopeful beginning. But I can''t say, it is prone to accidents," he said.
The report said in the topic ''Building Bridges'': "The process of re-engagement with Pakistan through a comprehensive dialogue covering all outstanding issues has commenced."
India had put on hold the Composite Dialogue process in the wake of the 26/11 attacks, but resumed talks with Pakistan last year.
The report said India firmly believes in developing a mutually beneficial relationship with its neighbours.
"We have demonstrated that wherever required, we will go beyond traditional norms of reciprocity and extend asymmetrical benefits in the interest of providing a strong impetus to bilateral and regional linkages," it said.
On ties with Bangladesh, it said significant progress has been made in implementing the decisions taken during the visit of Prime Minister Sheikh Hasina in Jan 2010.
These include a line of credit of USD 1 billion to Bangladesh for development of infrastructure in and for a number of projects that will improve connectivity for our North-Eastern states and create strong economic linkages with Bangladesh.
On China, it said the relations with the Communist nation continue to remain a priority in India''s foreign policy.
The visit to China by President Pratibha Patil in May, 2010, followed by the visit of Premier Wen Jiabao to India in December, 2010 were in addition to several other substantive interactions on the sidelines of major regional and multilateral events, the report noted.
The two sides held discussions under the extensive dialogue architecture that provides a platform to exchange views on the entire range of bilateral issues.
"During 2010, a number of cultural and business events were held through the year, including a Festival of China in India and a Festival of India in China to mark the 60th anniversary of establishment of diplomatic relations between the two countries," the report noted.
It said India is assisting Nepal to develop its infrastructure in the border areas adjoining India through the development of integrated check posts, cross-border rail links and feeder and lateral roads in the Terai area of Nepal.