"Hopes of Pakistan and India working their way back to normal relations received a major setback when Delhi called off on Monday the August 25 meeting of foreign secretaries of the two countries because of Pakistani high commissioners consultative session with a Hurriyat leader," the Dawn said.
It said the foreign secretaries were to meet for exploring the way forward in the stalemated relationship in pursuance of the decision taken by Prime Minister Nawaz Sharif and his counterpart Modi in their meeting in Delhi in May.
The paper said India's decision followed string of terse diplomatic exchanges triggered by Prime Minister Modi's accusations during his visit to Kashmir that Pakistan was too weak to fight a conventional war so it was inflicting terrorism on India through a proxy war.
It quoted unnamed analysts as saying that the "calling off of talks marked a giant step back for diplomatic ties that received a boost after Modi, in a surprising move, invited Prime Minister Sharif along with other South Asian leaders to his swearing-in ceremony in Delhi in May."
It also said that on Friday, Modi made a sharp departure from Independence Day speeches by his predecessors by not mentioning Pakistan at all in his address to the nation.
Another major paper The News International reported that Pakistan received a jolt and the Sub-continent peace efforts received a great setback due to cancellation of talks.
"India gave an option to Pakistan to choose between the foreign secretary-level talks and meetings with Kashmiri separatists," it said.
The paper said that after hours of deliberations at the Foreign Office, the spokesperson finally reacted by agreeing that the Indian decision was a "setback" but did not express any great disappointment nor proposed for a re-think on it.
It criticised Pakistan's delayed reaction on the issue.
"Pakistan, once again lost the media narrative with a delayed response. The Indian government went into an overdrive with press releases and comments on Twitter and Facebook while Islamabad took its time to respond with a lackluster statement," it said.