The nuclear-armed nations have fought three wars since independence from Britain in 1947. - AP Photo

Friday marks the second anniversary of the deadly 2008 attacks in Mumbai by Pakistan-based militants that left 166 people dead, and the two south Asian rival powers remain bitterly estranged.

An investigation into the plot in Pakistan has stalled, India accuses its neighbor's spy agency of having a hand in the attacks and the United States is walking a diplomatic minefield as it tries to manage prickly relationships key to exiting Afghanistan.

On his recent trip to India, US President Barack Obama called on India to bolster peace efforts. At the same time, he said Pakistan's fight against extremism within its borders was “not as quick as we'd like,” and that India's neighbour should do more to help development in Afghanistan.

The nuclear-armed nations have fought three wars since independence from Britain in 1947.

Security

For India, security is the top issue. It has refused to resume a series of talks until Pakistan takes more action against Pakistan-based militant groups.

In particular, India wants Pakistan to show it is serious in reining in the militants behind the Mumbai attacks.

This is complicated by Indian suspicions that the Pakistan security establishment backed the militants in some way. This summer, Indian Home Secretary G.K. Pillai directly blamed Pakistan's powerful Inter-Services Intelligence (ISI) agency for the attacks. Testimony from Pakistani-American David Headley, who scouted targets for the militants who staged the attack, says some ISI officers were connected to the plot.

For its part, Pakistan accuses India of backing separatists in its Baluchistan province and providing weapons and funding to Pakistan Taliban groups, charges India denies.

Afghanistan

Afghanistan is a major source of friction. The two countries have long competed for influence there and Pakistan is deeply suspicious of a rise in India's presence after the fall of the Islamabad-backed Taliban government in 2001.

It accuses India of using Afghanistan as a base to create problems inside Pakistan, including backing separatists in its Baluchistan province. India denies the accusations, saying its focus is on development.

India worries that an Afghanistan dominated by Pakistan's allies in the Taliban after a U.S. pullout would allow anti-Indian militants a base from which to launch attacks.

This rivalry is complicating U.S.-led efforts to end an intensifying Taliban insurgency and bring stability to Afghanistan more than eight years after the Taliban were ousted.

Kashmir

The divided, mostly Muslim Himalayan region of Kashmir is at the heart of hostility between the neighbours and was the cause of two of their three wars. The third was over the founding of Bangladesh.

Separatists began an insurgency against Indian rule in 1989 - a movement almost immediately backed by Pakistan - and since then tens of thousands of people have been killed.

Most fighters want all of Kashmir to become part of Pakistan but many ordinary Kashmiris want independence from both India and Pakistan.

Pakistan Foreign Ministry spokesman Abdul Basit was quoted by the news agency Press Trust of India as saying the United States ought to play an “effective role for an amicable solution of the longstanding issue of Kashmir” given close India-US ties.

The United States, however, has shown no enthusiasm for getting involved in what it calls a bilateral issue for Pakistan and India.

Violent anti-government protests have swept India-controlled Kashmir since June, killing at least 110 people. The region is under an army lockdown.

Water

The two countries disagree over use of the water flowing down rivers that rise in Indian Kashmir and run into the Indus river basin in Pakistan.

The use of the water is governed by the 1960 Indus Water Treaty under which India was granted the use of water from three eastern rivers, and Pakistan the use of three western rivers.

Pakistan says India is unfairly diverting water with the upstream construction of barrages and dams. India denies the charge.

Siachen

Indian and Pakistani forces have faced off against each other in mountains above the Siachen glacier in the Karakoram range, the world's highest battlefield, since 1984.

The two sides have been trying to find a solution that would allow them to withdraw troops, but India says it is unwilling to bring its forces down until Pakistan officially authenticates the positions they hold.

Pakistan has said it is willing to do so but on the condition that it is not a final endorsement of India's claim over the glacier, one source of meltwater for Pakistan's rivers.