"The Pakistani leadership should not get into the idea of committing suicide because we can take a bomb or two more," Mr Fernandes told a conference in the city of Hyderabad.
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There will be no Pakistan left when we have responded
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Indian Defence Minister George Fernandes
He was responding to a question about President Musharraf's remarks that India should expect a "non-conventional war" if it attacked Pakistan.
The president's spokesman later made clear he was not referring to nuclear weapons.
Despite the denial, Mr Fernandes described President Musharraf's comments as "irresponsible", and said Pakistan should not indulge in such talk.
"If I can reach them [Pakistanis] from this platform, this is my message: Please stop making stupid statements," he said.
He said India looked at its nuclear capability as instruments of deterrence rather than as showpieces.
Tests
India has ruled out any first strike with nuclear weapons, but reserves the right to use them in the event of an attack using non-conventional arms.
Pakistan has not ruled out the first use of nuclear weapons in the event of a major attack.
Both countries have tested nuclear devices and have missiles capable of carrying nuclear warheads.
They came close to war last year following an attack in December 2001 on the Indian parliament, which Delhi blamed on Pakistani-backed militants.
They stepped back from the brink after high-level international diplomacy to resolve the crisis between them.