New Delhi, Jan 6 (PTI) Gujarat Chief Minister Narendra Modi today said the setting up of the National Investigation Agency (NIA) was "contrary to our federal spirit" and an attempt at "sidetracking" the states in the fight against terror.

"By setting up the National Investigation Agency, the Central government now obviously wants to take over upon itself the responsibility of fighting terror by sidetracking the states," Modi said in his speech at the Chief Ministers' conclave being held here.

"Even though this arrangement is contrary to our federal spirit, I wish the Central government all success in its new role," he added.

Modi, who has been in the forefront in demanding a POTA-like anti-terror law, said the amendments made in Unlawful Activities (Prevention) Act, 1967, during the just-concluded Parliament session had only weakened the Act.

"Provisions relating to grant of bail have been diluted even in the amended UAPA as compared to POTA. This will facilitate terrorists in getting bail," Modi said.

He felt that the amended law also did not empower the police and investigating authorities adequately. "The admissibility of confessions before police officers of certain ranks as provided in POTA and as proposed in GUJCOC has been ignored," he said.

The BJP leader suggested that the Centre should develop one of the small states as a model to fight terrorism.

"This (model) should cover all activities connected with terror including hawala transactions, fake currency, drug trafficking and misuse of communication equipment," he said adding that if successful, the model can be replicated in other states.