Barely 16 months after Pakistani terrorists killed 166 people and brought life to a standstill in Mumbai, India's commercial capital is again in the news for the wrong reasons. On Sunday police announced the arrest of two suspected Islamic militants accused of plotting to bomb a nuclear reactor, the country's leading petroleum company and a popular shopping mall. Predictably enough, the authorities stressed the alleged terrorists' links with Pakistan. They were apparently in touch with a handler in Karachi code-named "Uncle."

But by now Indians ought to be less alarmed by the established fact that their Western neighbor is a leading sponsor of terrorism, and more by the mounting evidence that there is no shortage of disaffected Indian Muslims willing to wage war against their own country. Abdul Lateef Rashid and Riyaz Ali, the men accused of the plot, are Mumbai natives. Their arrest follows last month's bombing of a bakery popular with students and foreigners in the Western city of Pune that killed 17 people. As in the aborted Mumbai plot, Indian officials suspect the involvement of Indian nationals in Pune acting in concert with the Pakistan-based Lashkar-e-Taiba.

Associated Press

Abdul Lateef Rashid and Riyaz Ali as they left court Sunday.

For the longest time, India has both cherished and promoted the myth that its problem with radical Islam, the extreme interpretation of the faith that seeks to order the state and society by Shariah law, is entirely imported. It made front page news when, in 2005, then President George W. Bush famously introduced Prime Minister Manmohan Singh to Laura Bush by pointing out that not one of India's 150 million Muslims had joined al Qaeda. Indian columnists and op-ed writers took to parroting New York Times columnist Thomas Friedman's thesis—based more on hope than fact—that a robust democracy, a secular constitution, a largely tolerant population and a thriving economy would starve radicals of the oxygen of anger they need to survive.

Unfortunately, the truth is much less neatly packaged. While Pakistan, and to a lesser degree Bangladesh, do indeed provide succor and sanctuary to radical Muslims battling India, India itself has hardly been immune to the wave of radicalism that has swept through Muslim communities from Morocco to Mindanao over the past 35-odd years.

Take the Indian Mujahideen, a homegrown terrorist group that has claimed responsibility for bombings in five cities that have claimed about 150 lives since 2007. The group is an offshoot of the banned Students Islamic Movement of India, which espouses the worldview of the subcontinent's most influential radical ideologue, Syed Abul Ala Maududi (1903-79), founder of the Jamaat-e-Islami. Mr. Maududi, like his contemporaries, the Muslim Brotherhood's Sayyid Qutb in Egypt and Iran's Ayatollah Khomeini, believed that it was the duty of Muslims to strive to impose God's law, Shariah, on Earth. He believed that Islam is an innately revolutionary ideology, and warfare in its cause an exalted form of piety. Not surprisingly, Mr. Maududi's ideological heirs in the Indian Mujahideen have vowed to spread their faith across India, wage jihad against "infidels," and replace democracy with "God's government."

Apart from giving space to radical Islam in its noisy polity—SIMI was banned as late as 2002, 25 years after its founding—India has also allowed a culture of grievance to take root among Muslims. Rather than celebrate the opportunities afforded by India's secular state, open society and vibrant economy, the majority of Indian Muslim leaders and a largely leftist intellectual class speak the language of victimhood and espouse quotas in government jobs and parliament. For its part, a violent and intolerant Hindu fringe—including those responsible for the Gujarat riots of 2002, in which Muslims suffered disproportionately—has given radicals a powerful recruitment tool.

Nonetheless, the core of the problem remains the ideological appeal of radical Islam. As in other parts of Asia and the Middle East, a distressingly large number of India's homegrown jihadists boast a solid education and career prospects that their less fortunate countrymen can only dream of. Riyaz Bhatkal, a co-founder of Indian Mujahideen, who allegedly fled India for Pakistan after the 2008 Mumbai attacks, trained as a civil engineer. Altaf Subhan Qureshi, the alleged mastermind of the 2008 bombings in Bangalore, Ahmedabad and Delhi is a software engineer. So is Mansoor Peerbhoy, a former Yahoo! employee who sent out emails in advance of blasts in Delhi, Jaipur and Ahmedabad. Even Messrs. Rashid and Ali, the men arrested over the weekend, are computer literate, though relatively poorly educated and employed in low-end jobs. This in a country where one in three adults can't read and write.

While pressuring Pakistan to give up its sponsorship of terrorism and getting India's law enforcement officials to bear down are necessary measures, the country must also search for a deeper cure. To begin with, Indians ought to look beyond the neighborhood to view radical Islam as a global phenomenon. The country also needs to foster a cohort of Muslim intellectuals who spend at least as much time examining problems within the community as they do hyperventilating about Hindu nationalists. Finally, when elected politicians pander to fundamentalist Muslim leaders—as is common in large parts of the country—the bureaucracy, the courts and the press must hold them accountable.

India's long war with radical Islam won't be won overnight, but it's about time the country at least starts viewing it clearly.

Mr. Dhume, the author of "My Friend the Fanatic" (Skyhorse Publishing, 2009), is a columnist for WSJ.com.

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