Pakistan on Monday termed the induction of an indigenously-built nuclear-powered submarine by India as a 'destabilising step' and said it was capable of defending itself in the face of all such regional challenges.

"The government of Pakistan is fully aware of this issue and is prepared to counter it at all levels. Pakistan's defence is fully prepared to face this challenge," Defence Minister Chaudhry Ahmed Mukhtar told reporters in response to a question about India's launch of 'INS Arihant'.

"We don't want any wars but we know how to defend ourselves," he said. A Pakistan navy spokesman told reporters that India's launch of a nuclear submarine was "a destabilising step which would jeopardise the security paradigm of the entire Indian Ocean region".

The Indian nuclear submarine will have far-reaching effects not only for Pakistan, but the entire Indian Ocean region and adjoining coastal countries, he said. The move could also trigger a nuclear arms race in the region, he said.

The government will have to decide about Pakistan making its own nuclear submarine though the navy is fully prepared to implement any decision taken by the government, the spokesman said.

India on Sunday launched its first indigenously-built nuclear-powered submarine. Built with Russian cooperation, the submarine can carry the Sagarika missile, which is capable of hitting targets at a range of 700 km.

The vessel will form the crucial third leg of India's triad of land, air and sea platforms capable of delivering nuclear weapons. India already has warplanes and missiles capable of carrying nuclear warheads.

Speaking at the launch of the submarine, Prime Minister Manmohan Singh [Images] said India did not have 'any aggressive designs' and only wanted 'an external environment in our region and beyond that is conducive to our peaceful development and the protection of our value systems'.

Defence Minister A K Antony said the nuclear submarine was crucial for a credible second strike capability in view of India's voluntary 'no first use' nuclear weapon policy.