The defence ministry says radicalisation and fresh recruitment (for terrorism) in south Kashmir is a cause for concern, while also expressing concerns over "developments" in Jammu and Kashmir and Punjab.
The ministry's annual report for 2015-16 said while there is a "steep decline" in terror attacks in the hinterland and violence by left-wing extremists, "...developments in Jammu and Kashmir and Punjab have been a cause of concern, especially cross-border terror attacks and trafficking of arms and narcotics".
While stating that the overall security situation in Jammu and Kashmir remains "stable", the report said: "This is primarily due to the protracted operations of the security forces in the hinterland and effectiveness of the counter-infiltration grid on the Line of Control and International Border."
"However, radicalisation and fresh recruitment in south Kashmir is a cause of concern. External factors, including changing situation in Pakistan and Afghanistan, may also impact the internal situation in Jammu and Kashmir," the report said.
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