His comments came on a day Pakistan declined an invitation by Indian Parliament and Inter-Parliamentary Union (IPU) to attend the South Asian Speakers' Summit in Indore next month.
Making a distinction between what he called the "many Pakistans", Menon, during a discussion here, said while talks may be conducted with traders, ISI or the Pakistani army had an "institutional interest in hostilities with India".
"I think, it is a false choice. If you stop talking, will terrorism stop? No. If you do talk, will terrorism stop? No. I think, it is a false binary. You talk if it is in your interest, if there are things you want to do. I think, it is in your interest.
The discussion on 'Choices: Inside the Making of Indian Foreign Policy', a book authored by Menon, also saw the participation of former diplomats Shyam Saran and Ronen Sen at Sapru House here.
Menon said in the age of "ultra-nationalism", India will have to make "difficult choices".
Speaking on the role of leadership in foreign policy, Saran, a key player in the erstwhile UPA administration, said interventions made by former Prime Minister Manmohan Singh and former US President George Bush were crucial in pushing through the nuclear deal between the two countries.
He was let off the hook after he had tendered an apology. His remarks were seen as an affront to Parliamentarians.
Meanwhile, both Saran and Menon batted for "strategic autonomy" over "strategic alignment" in India's foreign policy, dwelling on the issue of whether groupings such as the NAM were relevant anymore.
However, Saran explained that any quest for autonomy did not necessarily have to be rigid and cited the example of India's alignment with the erstwhile Soviet Union when it served the country's interest.
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