Reacting to Mushrarraf's claim that most Kashmiris wanted to break free of India, the Indian foreign ministry said such statements will not help the ongoing peace initiatives.
"How can a peace initiative go forward in the face of such a signal of non-peaceful intent," said a foreign ministry statement.
The foreign ministry however pledged to persist with efforts in improving ties between the two neighbours.
Musharraf had made the remarks in an interview to an Indian television channel that was broadcast on Friday.
"The most distressing were the comments on Kargil and the implication that military adventurism of that nature is a legitimate instrument for furthering Pakistan's designs on Kashmir," the Indian foreign ministry asserted.
In between expressing his readiness to meet Indian Prime Minister Atal Behari Vajpayee for talks, the Pakistani president, during the course of the interview, expressed his tough stances on issues like Kashmir and the 1999 Kargil conflict.
The Pakistani president insisted Kargil was the inevitable fall-out of disputes like Kashmir and that they need to be resolved if any such recurrence was to be avoided.
The Indian foreign ministry said "the important steps that have been taken need to be carefully nurtured and built upon through further action in ending infiltration and terrorism, so that the two countries can progressively move towards dialogue."
"This requires restraint and maturity in addressing sensitive issues in India-Pakistan relations," it stressed.
The Indian authorities, meanwhile, on Saturday released a prominent Kashmiri separatist leader on bail two days after he was arrested.
Yasin Malik of the Jammu and Kashmir Liberation Front (JKLF) had been taken into custody soon after he had embarked on a signature campaign to press for the inclusion of Kashmiris in future talks between India and Pakistan.