Given its actions, it doesn't appear that Pakistan really wants peace, the Army chief added.
He was in the western sector, close to the India-Pakistan border, to witness the 'Hamesha Vijayee' exercise conducted by the Southern Command in Thar desert.
General Rawat said Pakistan should stop supporting terrorists. "Only then can we say that peace talks should take place," he told reporters in the exercise area near Barmer.
"We also want relations should be better but given what kind of actions there are (from their side) and terrorism is spreading in Jammu and Kashmir, it doesn't appear that they really want peace," General Rawat said.
The Army, paramilitary forces and Jammu and Kashmir police have been taking actions against militants in Jammu and Kashmir successfully and the action will continue, he added.
"It is important for Pakistan to understand our core concern, which is terrorism. We have time and again asked them to take action against terrorists who are operating from their soil. This is something they (Pakistan) will have to handle if they are serious in cultivating this friendship," Mr Kumar said.
The assertions follow Pakistan's Army chief General Qamar Javed Bajwa pledging his support for better ties.
According to media reports, General Bajwa has said he will support any initiative of the civilian government to resolve issues with India through talks.
In a rare move, the Pakistan Army chief briefed the Senate - the upper house of the parliament - on security situation and regional issues on Tuesday.