In an interview published in the Hindu newspaper on Tuesday, Shaath said India did not need to use Israel as an "intermediary" to forge close relations with America.
"I don't think you need that intermediary. Many people who felt that Israel was the address for the United States failed," Shaath said.
"Secondly, again Israel would like to make it look like all the resistance it is facing from the Palestinians is terrorism, to make it look like 9/11, which is false".
"Identifying with that puts you in a position of being anti-Palestinian when there is no need to do so," Shaath added.
The idea of forging closer ties with Israel was mooted by India's National Security Adviser, Brajesh Mishra, during a visit to the United States in May.
"Such an alliance would have the political will and moral authority to take bold decisions in extreme cases of terrorist provocation," Mishra told the American Jewish Community in Washington.
But Shaath wondered why India had not suggested such alliances with Morocco and Indonesia which too had been victims of "terrorism".
Ariel Sharon is due to visit India
India recognised Israel soon after the Jewish state's creation in 1948, but for decades has been close to Palestinian leader Yasir Arafat.
India did not establish diplomatic relations with Israel until 1992 amid the then-flourishing Middle East process.
But in recent years, India and Israel have grown closer and have begun to cooperate on defence issues.
New Delhi is hoping to clinch deals such as the acquisition from Israel of Phalcon air-borne early warning systems (AWACS), and Arrow-2 anti-ballistic missile defence.
The deals are expected to be high on the agenda during a visit next week to New Delhi by Prime Minister Ariel Sharon - the first by an Israeli head of government since full-fledged relations were established.
Indian officials said Sharon was due to arrive in the country on 7 September, but the official leg of his programme would only begin on 9 September.
It is likely his visit will be opposed by India's large Muslim community.