Pakistan has termed the boycott decision as "unfortunate".
India, the largest member of the eight-nation South Asian Association for Regional Cooperation (Saarc), announced its decision to pull out hours after Pakistan High Commissioner Abdul Basit was summoned to South Block and handed over Pakistan's "proof of cross-border origin" of the September 18 Uri terror attack.
In a statement, India said increasing cross-border terrorist attacks in the region and growing interference in the internal affairs of Saarc member-states "by one country" have created an environment that is not conducive to the successful holding of the 19th Saarc summit.
Ministry of External Affairs spokesperson Vikas Swarup said that India has conveyed to current SAARC Chair Nepal its decision not to attend the summit, for which Prime Minister Narendra Modi was slated to go.
"India remains steadfast in its commitment to regional cooperation, connectivity and contacts but believes that these can only go forward in an atmosphere free of terror.
"In the prevailing circumstances, the government of India is unable to participate in the proposed Summit in Islamabad," he said in the statement.
Swarup said that some other Saarc member-states have also conveyed their reservation about attending the Islamabad Summit in November 2016.
The other countries unwilling to attend are said to be Bangladesh, Bhutan and Afghanistan, according to sources.
The decision to pull out, marking a sharp escalation in India's attack on Pakistan for sponsoring terror, also comes a day after New Delhi decided to revisit the 56-year-old Indus Waters Treaty, and apportion more water to itself from river waters that have been used by Pakistan for decades.
Prime Minister Modi, chairing the meeting on the river waters treaty, is quoted as having said that "blood and water can't flow together".
India is also planning to revoke the Most Favoured Nation status to Pakistan in trade, in another punishing measure.
India has been hyping its diplomatic offensive against Pakistan over the past few days, over the latter's open backing of the Kashmir unrest and specially after the terror attack on an army camp in Uri on September 18 that left 18 soldiers dead.
Prime Minister Modi had announced last week during the BJP conclave in Kerala that the sacrifices of the Indian soldiers killed in Uri would not go waste and India will diplomatically isolate Pakistan.
Tuesday's move comes as in the United Nations General Assembly India has been unsparing in its attack on Pakistan for sponsoring terror. External Affairs Minister Sushma Swaraj on the floor of the UNGA announced that Jammu and Kashmir is an integral part of India and will always remain so.
The chances of Prime Minister Modi attending the Saarc summit had dimmed ever since Pakistan was seen to be openly backing the Kashmir unrest and had termed Hizbul Mujahedin terrorist Burhan Wani a martyr and observed a Black Day in his honour.
In August, Union Home Minister Rajnath Singh's visit to Islamabad to attend a Saarc ministerial was clouded over by bad diplomatic vibes between the two nations over the Kashmir issue.
Afghan envoy to India Shaida Mohammad Abdali told NDTV last week that his country was willing to consider a joint boycott of the Saarc summit along with India and other members.
Earlier in the day, Foreign Secretary S. Jaishankar summoned Pakistan's High Commissioner Basit for the second time since the Uri attack and handed over the evidence to him on the two arrested guides. Basit dismissed the proof as an attempt by India to divert world attention from alleged violation of rights in Jammu and Kashmir.
Jaishankar gave Basit a diplomatic note, stating that three days after the killing of 18 soldiers, villagers in Uri caught two residents of Pakistan-administered Kashmir who had acted as guides for the four attackers who sneaked into the army camp near the Line of Control (LoC).
The two -- Faizal Hussain Awan, 20, and Yasin Khursheed, 19, both residents of Muzaffarabad -- were handed over to Indian security forces and are now in Indian custody. India has also offered consular access to the two arrested Muzaffarabad guides.
Reacting to India's decision to pull out, the Pakistan Foreign Office, termed the decision as "unfortunate". It also hit out at the "excuse used by India" and said the world knows that "it is India that is perpetrating and financing terrorism in Pakistan", and cited the "public confession" by alleged Indian spy Kulbhushan Jadhav as "living proof".
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