After Pakistan announced that it will execute Kulbhushan, an Indian arrested there last year on charges of espionage, India retaliated by deciding it will not release 12 Pakistani prisoners who were cleared to return home tomorrow.
Kulbushan Sudhir Jadhav, 46, has confessed to spying for Indian intelligence agency, the Pakistani army said. He was found guilty by a military court which was closed to the public and was sentenced to death.
"Today, (army chief) Gen Qamer Javed Bajwa has confirmed his death sentence," a Pakistani military statement said, without stating when the execution would take place.
The move immediately escalated tension between India and Pakistan. "If this sentence against an Indian citizen, awarded without observing basic norms of law and justice, is carried out, the government and people of India will regard it as a case of premeditated murder," the Foreign Ministry said. Pakistani High Commissioner Abdul Basit was summoned to protest at the conviction and sentence. India has said it was repeatedly denied access to Mr Jadhav.
Pakistan arrested Mr Jadhav, a former naval officer, last year in March. It claims that he told the court that was tasked by India's Research and Analysis Wing (RAW) intelligence agency to "plan, coordinate, and organize espionage/sabotage activities aiming to destabilise and wage war against Pakistan" in the southwestern province of Balochistan and in the bustling port city of Karachi.
A security official told news agency AFP the court-martial had been kept secret even within the ranks of the military.
When Mr Jadhav was arrested, India said the claim that he was a spy was "baseless" and said a video of his alleged confession was not authentic.
In 2013, Sarabjit Singh, an Indian who had been on death row for 16 years for spying in Pakistan, was killed in jail by prisoners.
Pakistani analyst Hassan Askari said the decision to execute Mr Jadhav would "further increase tension between the two countries".
"The military has given a severe punishment which is according to Pakistani law," he told news agency AFP. "But we will have to see if Pakistan can sustain the political and diplomatic fallout."
Balochistan, Pakistan's largest but least developed province, has been battling a years-long separatist insurgency which the army has repeatedly characterised as "terrorism" instigated in part by India, a charge Delhi has always denied.
The prisoners who were to be released tomorrow as part of the practice by India and Pakistan to repatriate nationals lodged in each other's jails after they complete their sentence.