You've read the news: Muslim extremist militants have attacked Mumbai, India with small arms. Well over 100 dead, and multiple days of carnage in some of India's wealthiest hotels.
The attack was clearly directed at Americans, Israelis, and Britons--gunmen took tourists (in multiple locations, including the Taj Mahal Hotel) hostage and started demanding the turnover of civilians with US and UK passports, and started executing them. They also attacked a Jewish house. But these terrorists were ruthless, and carelessly gunned down anyone that didn't strictly follow rules, or appeared to be a threat. They were undisciplined, highly outnumbered, and hope to instill fear into the group to behave. What happened was well over 100 deaths, mostly Indian.
The attack was clearly designed to terrify Americans and Britons. But the attack has brought little in the United States or Britain but sympathy for Indians. The terrorists largely failed to hit the large number of US and UK citizens that they were hoping, and created such lasting carnage in India that the Indians took the vast majority of the impact. Now--nutjob fundamentalist Islamists have no problems with terrifying Indians and assorted Hindus.
But Pakistani fundamentalists have now incurred the wrath of their neighbors. India and Pakistan have gone to war 3 times since 1947, and almost went to war in 2001 over a bombing then. A nasty 2006 train bombing in Mumbai was blamed on Pakistani militants, and this attack already has been blamed on them as well.
The Indians are outraged--they are calling this "India's 9/11"--but their response is not obviously clear. They are angry at the US and UK--I remember seeing a live report interrupted by a hysterical man running by and asking why Indians had to die, why it wasn't the US getting bombed. But the Indians also hate the Pakistanis, and are very used to placing blame on them.
Pakistan's Intelligence was very involved in Indian terror networks before 9/11, but those relations have strained (in part due to US pressure and in part due to Pakistan's own Islamist problems). But if this attack was coordinate in a Pakistan "safe haven," then the Indians may start sharing the same attitude the US has about Pakistan's ability to police its own territory. There is some International Law precedent that a government unable to administer and police its own territory has forfeited its sovereignty. But this will require many months of UN deliberations to happen, if it happens at all.
On the other hand, the US and India could just go ahead and drive in. But even if they were ready to take the political beating for such an attack, they would have to make it quick and decisive--a prolonged war with Pakistan would only strengthen the Islamists. But it's ultimately unlikely to happen.
Pakistan's Intelligence chief is visiting Mumbai, likely to try and keep relations from going sour. But the Indian government, which barely has a stable majority, can't afford to do nothing. If they don't blame Pakistan, then they take the blame themselves. They're unlikely to blame the US and UK for bringing the heat into India--they're so used to anti-Indian attacks that the specific target of these terrorists is mostly immaterial. The Indians will need a target to blame, and decisive action to take, probably targeting Pakistan in some way. How they'll manage their domestic politics and neighborly relations is a tough question that New Dehli will have to be quite clever to figure out.