Modi, during last SAARC Summit in Nepal in November 2014, had announced India's decision to develop the satellite to benefit all member countries in various fields including telecommunication and tele-medicine.
"Pakistan has decided to opt out of the satellite project. So it cannot be called a SAARC satellite. It will be a South Asia satellite," External Affairs Ministry Spokesperson Vikas Swarup said.
In June 2014, Modi had asked ISRO to develop the satellite which can be dedicated as a "gift" to the neighbouring countries.
Asked about last week's SAARC Foreign Ministers' meeting in Nepal's Pokhra, Swarup said India "pursued connectivity issues which it has been pushing strongly.
"Two agreements were close to finalisation which could not be finalised in the last summit," he said, terming the discussions as very positive.
"Discussions were very positive. There was a lot of sentiments that South Asia is among the least connected regions of the world and that needs to be changed," said Swarup.
Pakistan will host the next SAARC summit from Nov 9-10.
External Affairs Minister Sushma Swaraj attended the Pokhra meeting.
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