"India remained one of the countries most afflicted by terrorism with over 1,000 deaths attributed to terrorist attacks in 2009, primarily in Kashmir, the Northeast, and the Maoist affected 'Red Corridor'", the State Department noted on Thursday in its annual mandated report on global terrorism.
However despite being "clearly committed to combating terrorism, the Indian government's counter terrorism efforts remained hampered by its outdated and overburdened law enforcement and legal systems," the report suggested.
"Although there were no large-scale assaults similar to the November 26, 2008 attacks in Mumbai, senior government officials warned that India remained at risk on the basis of the volume of credible threats the government continued to receive," it said.
Taking note of a series of terrorist attacks, the report, however, said "the state of Jammu and Kashmir, historically victim to the largest number of foreign terrorist attacks, saw casualties decline significantly from previous years."
Citing Home Minister P. Chidambaram, the report noted that in December 700 foreign insurgents were active in the state, down from 800 earlier in the year even as 71 civilians and 52 members of the security forces were killed in terrorist-related violence in the state through November.
Noting that Prime Minister Manmohan Singh had told Parliament "Maoists/Naxalites insurgent groups represented the most significant threat to domestic security," it said "Maoists/Naxalites conducted numerous attacks against police and local government officials and bombed railways, killing civilians and disrupting services."
With the return of the ruling Congress Party-led coalition government to power despite criticism that security and intelligence lapses failed to prevent the 26/11 attacks, the new government instituted several reforms designed to augment its existing security structures and to develop new capabilities.
In the wake of the Mumbai attacks, India's Parliament has introduced bills to restructure its counter terrorism laws, the report said noting the new National Investigation Agency had registered several cases in 2009, the report noted.
Amendments to the Prevention of Money Laundering Act (PMLA) came into force in June, furthering India's ability to combat the financing of terrorism, the report noted.
"In December, India's Narcotics Control Bureau arrested Naresh Kumar Jain, allegedly a significant underground banker, as part of an operation to close a global network of illegal money transfers."
Since the Mumbai attack, the Indian government had also increased its bilateral and multilateral cooperation with foreign governments on counterterrorism, the report said.
Senior Indian government officials, including the home minister, visited the United States to advance bilateral counter terrorism cooperation, culminating in the conclusion of the US-India Counter terrorism Cooperation Initiative during Prime Minister Manmohan Singh's official state visit in November, it noted.