Referring to the 73-day long Dokalam standoff, the Army chief warned that the situation could gradually snowball into a larger conflict on the northern border.
He said there is a possibility that these conflicts could be limited in space and time or can expand into an all out war along the entire frontier, with Pakistan taking advantage of the situation.
The comments by Gen. Rawat came a day after Prime Minister Narendra Modi and Chinese President Xi Jinping agreed on a "forward-looking" approach to Sino-India ties, putting behind the Dokalam standoff.
The Army Chief said India cannot afford to let its guard down against China.
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He was speaking at a seminar organised by the Centre for Land Warfare Studies.
The Army chief also talked about China engaging in a psychological warfare by using the media and information technology against India during the Dokalam face-off.
The Army chief rejected the notion that credible deterrence could prevent war and pitched for adequate budgetary allocation for the armed forces.
Talking about Pakistan, Gen. Rawat said there was no scope for any reconciliation with that country.
"As far as our western adversary is considered, we don't see any scope of reconciliation, because their military, the polity, and the people in that nation have been made to believe that there is an adversary, India, which is all out to break their nation into pieces," he said.
Rawat also explained that credible deterrence does not take away the threat of war.
"Nuclear weapons are weapons of deterrence. Yes, they are. But to say that they can deter war or they will not allow nations to go to war, in our context that may also not be true," he said.
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