The Pakistani government has authorised its military to “respond decisively and comprehensively to any aggression or misadventure” by neighbouring India, as tensions soar between the nuclear-armed rivals.

India has vowed a “jaw-breaking response” to a suicide bombing in the disputed Kashmir region last week that killed 42 Indian soldiers – the worst such attack since the start of an armed rebellion in 1989.

Pakistan’s Prime Minister Imran Khan announced the order in a government statement released after a meeting of his National Security Committee on Thursday.

It said Pakistan was “not involved in any way, means or form” in the attack which it said was “conceived, planned and executed indigenously”.

In the statement, Pakistan reiterated its offer to help investigate the attack and to take action against anyone found to be using the Pakistani soil for attacks on India.

Pakistan also offered to hold a “dialogue” with India on all issues, including terrorism. Earlier, it had demanded India provide evidence for its claims that it supports Kashmiri rebel groups.

India and Pakistan, both nuclear powers, have been fighting for seven decades over the Himalayan region of Kashmir, now one of the most militarised zones in the world.

India has long accused Pakistan of harbouring and aiding armed rebels who target its forces in Kashmir.

The Himalayan territory is split between Pakistani and Indian zones of control, but both countries claim it in its entirety and have fought two of their three wars over it.

An armed rebellion erupted in Kashmir in 1989, demanding independence or a union with Pakistan.

Pakistan denies supporting the rebels and has blamed the violence in Kashmir on what it views as India’s military occupation of the territory.

Following last week’s attack, India halted trade and a key bus service to the Pakistani-controlled part of Kashmir.

News agency AFP on Thursday reported that bunkers were being rebuilt and a blackout ordered in Chakothi, a border village in Pakistan-administered Kashmir.

Local authorities have encouraged residents in areas near the Line of Control (LoC) to take additional precautions against the risk of “mischievous action” by the Indian army.

“Bunkers should be constructed in areas where they don’t exist. Unnecessary lighting should be avoided after sunset and people should refrain from travelling on roads located close to LoC,” the local disaster management agency warned residents in Chakothi.

Pakistan on ‘terror’ list

India, meanwhile, is pressing for Pakistan to be kept on a terrorism-financing watchlist, three Indian government officials told Reuters news agency on Thursday.

The Financial Action Task Force (FATF), a global body created to counter terrorism financing and money laundering, has been meeting in Paris this week and Pakistan has been hoping to get off a “greylist” of nations with inadequate controls over such activities.

But two Indian government officials dealing with the issue said new information had been provided to the FATF relating to Pakistan after the car bombing last week in Pulwama district of Kashmir.

Pakistan-based Jaish-e-Mohammed (JeM) claimed responsibility for the attack. A third Indian official said details relating to the group’s operations were provided to the FATF.

“It was a post-Pulwama brief,” said one of the officials when asked about the information provided to the watchdog. The officials declined to be named as the talks were still under way in Paris.

Pakistan has been on the greylist since June, making it harder for it to access international markets at a time when its economy is stumbling.

While there are no direct legal implications from being on the list, it brings extra scrutiny from regulators and financial institutions that can chill trade and investment and increase transaction costs, experts say.

Pakistan’s finance ministry did not immediately respond to Reuters’ request for comment.

The Pulwama attack chilled the long frosty relations between India and Pakistan, with New Delhi accusing Islamabad of failing to crack down on armed groups operating from its soil and saying it would work to isolate Islamabad diplomatically.

India cancelled Most Favoured Nation trade privileges for Pakistan and imposed 200 percent duty on goods coming from Pakistan, further squeezing the miniscule $2bn bilateral trade.

In the latest effort to put pressure on Pakistan, a senior Indian minister on Thursday reiterated New Delhi’s plan to restrict the flow of water to Pakistan from its share of rivers.