Pakistan's army started to crack down on armed Baluchistan fighters after a rocket attack last month while Musharraf was visiting the region. Baluch nationalists say 200 people have since been killed, but Pakistan has not commented on casualties.
When asked whether India was backing Baluch fighters, Musharraf told TV channel CNN-IBN in an interview aired on Sunday: "There are lot of indications, yes indeed."
He said there is a "lot of financial support, support in kind being given to those who are anti-government, anti-me and to those feudal people who are anti-national".
A spat erupted this month after India expressed concerns about the situation in Pakistan's southwestern province of Baluchistan.
Navtej Sarna, the spokesman for the Indian Foreign Ministry, said on Saturday: "As far as any allegations about India's interference in Baluchistan are concerned, I would like to categorically reject these allegations as being utterly baseless and false."
Musharraf said he hoped that the dispute over Baluchistan would not hurt the peace process between the two nuclear-armed neighbours which have fought three wars.
Tribesmen want Baluchistan to
get a bigger share of gas sales
"It should not be a setback to the process of dialogue of resolution [of disputes]," he said.
On Sunday a key ally in Pakistan's ruling coalition retracted a threat to break away, hours after demanding that the government halt military operations in Baluchistan and pursue negotiations with tribesmen there.
The Mutahida Qami Movement (MQM) had said it would pull out of the alliance if the government did not agree to its demands by 13 January.
But later on Sunday, Musharraf and Shaukat Aziz, Pakistan's prime minister, made separate telephone calls to Altaf Hussain, the chief of MQM, and said there would be no military operation in Baluchistan.
But opposition parties in Baluchistan accuse the government of using helicopter gunships and warplanes to attack civilians in northern Baluchistan.
In recent weeks, army helicopters and ground troops have raided training bases used by tribesmen suspected in attacks against the government in Baluchistan, an impoverished, sparsely populated southwestern province.
The tribesmen want more royalty payments from the central government for resources extracted in the area, and oppose government plans to build new military garrisons there.
Aziz confirmed there would be no
military operation in Baluchistan
The government says the new garrisons are needed to bolster security.
On the ground, tribesmen fired 18 rockets in Baluchistan on Saturday. One hit a home, killing a four-year-old child and wounding his brother and mother.
About an hour after Saturday's blast, suspected Muslim fighters raided a checkpoint 50km away, killing eight Pakistani security personnel deployed to stop fighters from entering or leaving Afghanistan.
On Sunday, a senior Pakistan army official said the government still did not know who launched an attack a day earlier that killed eight people in a tribal region and was blamed on US helicopters by local leaders. Pakistan has thousands of troops deployed in the area.
Major-General Akram Sahi expressed grief over the deaths, at a cleric's home in Saidgi, a village in the North Waziristan tribal region near the Afghan border.
Sahi told tribesmen from Saidgi: "We will definitely investigate who carried out the attack on you."