The former military ruler also said that Pakistan faced threats from Al Qaeda who exist "in small numbers" in the country's western tribal areas, the Pakistani Taliban who are getting bolder, and growing numbers of ex-mujahideen travelling to Jammu and Kashmir to fight the Indian Army.
Expressing concern about what he said was increasing Islamic extremism among the young in India, he said: "The Indian government needs to look into that." He did not elaborate.
Speaking at Asia Society's Texas Centre, Musharraf referred to three blunders that contributed to the terror threat emanating today from Afghanistan and western Pakistan.
He blamed the US and the West for arming and encouraging the mujahideen to wage war in Afghanistan against the Soviets, a move that introduced religious militancy into that country, and then abandoning the war-ravaged country once Soviet troops got out.
"So the first blunder, in 1989, was abandoning the place without any rehabilitation or resettlement, (which) gave rise to al Qaeda and then the Taliban."
Defending his decision to recognise the Taliban government in Afghanistan, he said he aimed to "change them (the Taliban) from within". Western failure to do that constituted the second blunder.
He stressed that joining the post-Sep 11 coalition to fight terrorism was in Pakistan's self-interest.
"I want to underline this because there are now expressions in the West and the US that we are not doing enough or that our heart is not in the issue. Wrong, Sir. Nobody in Pakistan would like to have Talibanisation of Pakistan," he said.The third blunder was the failure to push for a political solution when the coalition had the upper hand militarily.
Musharraf, who this month said he was forming a new political party, said he was the only person in the Pakistani political scene capable of delivering the country from "the darkness that it faces today".
"All the political alternatives available have been tried and failed," he added.
Musharraf, who seized powe in 1999, ruled Pakistan when the US invaded Afghanistan following the 9/11 terror attack. He stepped down in 2008 and left Pakistan. He now lives in London