Its a nation which cares about its existence, nuclear option is not that easy to press.
We have to take offensive action which increases the cost of any actions by terrorist groups based in Pakistan to a point where they stop the evidence talk and start taking steps to stop these groups operating from their land, this action has to be short of threatening their territorial integrity however one which hurts them economically and psychologically .
Some examples would be offensive patrolling by Indian Navy and Coast Guard, firing on any Pakistani fishing boats that are in neutral waters and near Indian waters with the clear aim of destroying their industry and with complete denial of these actions.
Another step could be to increasing the border troop presence to a point where they are constantly on the threat of offensive action, which will require them to be in a operational state which will cost them money the instability will cause both nations to loose a lot economically, and from current indicators they don't have much money or industry to loose, once they are in a greater debt we could pull back and then increase the pressure again, engaging them in an arms race is always a good option, like the AWACS, nuclear weapons, submarines, their small economy is already bleeding from these expenses.
One thing is for sure as soon as our hostile behavior stops somehow magically there is a terrorist strike or two, it all seems very calculated, we have to raise the stakes to a point where this becomes unsustainable.