Musharraf admitted that he had violated rules governing the use of the military aid, and justified his actions by saying he had "acted in the best interest of Pakistan."
In an interview with a news channel, he said he "did not care" whether the US would be angered by his disclosure.
The former military ruler, who resigned as President in August last year to avoid impeachment, said he was not ready to compromise on Pakistan's interests.
India and several influential lawmakers in the US have been saying that Pakistan had used funds given to it by the US to take on militants to strengthen its defences against India. However, Pakistan had been denying the charges.
Musharraf said that if he had not supported the US in the war against terror after the 9/11 attacks, American forces could have entered Pakistan to capture its nuclear assets. He said it was also possible that the US and India could have jointly attacked the country.
Musharraf said Pakistan's nuclear programme was so advanced during his tenure that scientists had not only begun enriching uranium but had also developed plutonium-based weapons.
Asked about scientist A Q Khan's claim that he had been forced to make a confession about running a nuclear proliferation network, Musharraf said Khan "had done a lot but he was lying that he was forced to apologise before the nation".
Musharraf said he expects justice from the country's Chief Justice Ifthikar M Chaudhry if he is tried for treason and for the killing of Baloch nationalist leader Nawab Akbar Bugti.
Musharraf, whose act of imposing emergency in 2007 was declared as "unconstitutional" by the Supreme Court, claimed Saudi King Abdullah bin Abdul Aziz had assured him that PML-N chief Nawaz Sharif will not insist on his trial for treason.
Sharif has been pressuring the Pakistan People's Party-led government to put Musharraf on trial.
Musharraf said if he is put on trial for treason, all the judges who supported his decisions should also be tried.
He had declared the emergency on November 3, 2007 after sacking 60 members of the higher judiciary, including Chaudhry.
The former President, who is currently living in London, told Express News channel that he expects justice from Chaudhry if he is tried for treason and for the killing of Baloch Nationalist leader Nawab Akbar Bugti.
The Balochistan High Court had on Friday issued notices to Musharraf and his aides to appear before it in connection with the killing.
http://timesofindia.indiatimes.com/news/world/pakistan/US-funds-were-diverted-to-strengthen-defence-against-India-Musharraf/articleshow/5006340.cms
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