"Obviously our problem comes from our Western neighbour. It's clear what's happening," Jaitley said, referring to Pakistan.
Speaking at the Council on Foreign Relations, a prominent think tank, the minister said that most acts of terrorism across the world will have some footprint or the other as far as our neighbour is concerned.
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Afghanistan often blames Pakistan-based terror groups for carrying out attacks in the war-torn country.
There have been instances when Pakistani origin people were involved in terror attacks abroad such as the 2015 San Bernardino attack in the US in which a Pakistani-origin man and his wife killed 14 people.
Jaitley said India made many efforts to improve the ties with Pakistan over the last few years but every time there was a negative reaction.
"The prime minister (Narendra Modi) went there (Pakistan) and it was immediately followed up by an attack in Pathankot air base in India and then on the Uri military camp and now we have this unprovoked gesture of a military court sentencing an Indian to death through a kangaroo court process," said Jaitley, who is also holding the portfolio of defence minister.
"I think that doesn't help the cause of peace in the region at all," he added.
The minister said India's relationship with all its smaller neighbours has significantly improved.
"Whether it's Bangladesh, Sri Lanka, Myanmar or Nepal, we have an excellent relationship (with them). We have been cooperating with them. We have been a part of their economic growth story. We have made a conscious effort in that direction," he said.
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