As Pakistan's ruler, Musharraf was a key US ally in its "war on terror", but he now lives under tight security in his Karachi home, facing Taliban death threats and a series of criminal cases dating back to his near decade-long rule that ended in 2008.
The 71-year-old -- who seized power in a bloodless coup in 1999 -- praised new Afghan President Ashraf Ghani, who made his first official trip to Pakistan last week to try to reset fractious relations.
Pakistan's support is seen as crucial to Afghan peace as US-led forces pull out by the end of this year after 13 years battling the Taliban.
But the former strongman said calming tension between India and Pakistan -- running high at the moment after some of the worst cross-border firing in years -- is key to peace in Afghanistan.
"The danger for Pakistan is... the Indian influence in Afghanistan," he told AFP at his house in Karachi.
"That is another danger for the whole region and for Pakistan because Indian involvement there has an anti-Pakistan connotation. They (India) want to create an anti-Pakistan Afghanistan."
"If Indians are using some elements of the ethnic entities in Afghanistan, then Pakistan will use its own support for ethnic elements, and our ethnic elements are certainly Pashtuns," Musharraf said.
"So we are initiating a proxy war in Afghanistan. This must be avoided."
Former Afghan president Hamid Karzai routinely accused Pakistan of secretly backing the Taliban as a hedge against Indian influence in his country.
Pakistan denies the accusation, though it was one of only three countries to officially recognise the Afghan Taliban regime, in power from 1996 until 2001 when a US-led invasion resulted in its overthrow.
Ghani and Pakistani Prime Minister Nawaz Sharif pledged at the weekend to move on from the sniping and bitterness of the Karzai years, with the Afghan leader saying three days of talks had undone 13 years of differences.
But Musharraf warned that regional rivalries could flourish again once NATO's 34,000-strong combat contingent leaves by the end of next month.
"When there is an absence of all these forces, then yes there would be a vacuum... in that case there can be more serious repercussion," he said.
Musharraf said he stands by his decision to ally Pakistan with Washington in the aftermath of the 9/11 attacks.

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