New Delhi: Prime Minister Atal Behari Vajpayee on July 31said India considered it "important" to have friendship with Pakistan but made it clear that there would be no compromise on the issue of terrorism.

Replying to a discussion in the Rajya Sabha on his recent visits to Germany, St.Petersburg, Evian and China, he said, "it is important to have friendship with Pakistan. But that does not mean that there should be a compromise on the issue of terrorism".

He said, "we (the two countries) will have to meet the challenge posed by terrorism head on". At the same time, both have to move towards friendship, he said.

The need of the hour for New Delhi and Islamabad was to join hands to fight poverty plaguing the two countries, Vajpayee said.

Observing that there was immense potential for bolstering trade and economic ties with China and Pakistan, he said concerted efforts have to be made in this direction to promote mutually beneficial and good neighbourly relations.

PTI