"China has of course been assisting and arming Pakistan, which is like a red flag to India and that already makes it a second class enemy," Tata said in an interview telecast on Bloomberg UTV.
Describing India-China relationship as "not adversarial, but it is not the best", Tata, however, added, "you know China has never done anything adversarial to India, and India, I think, has been more concerned about China's economic strength overpowering India, which we really don't see."
When asked if he is worried about China, he said, "No, I am not worried. I wish we could find a way to be allies with China."
Exuding confidence about India, Tata said, "I really do believe, deep down inside, that...The Indian tiger has not been unleashed."
He, however, said, "I would prefer to use China as a very strong ally, to forge a relationship with China which would be a sustaining one and I think it could be done."
Explaining the complex nature of relationship between the two countries, he said, "I think there is a concern on part of India that China is trying to dominate the region (Asia) and there is an equal concern on the part of China that India is trying to dominate the region."
Commenting on China as a car market, Tata said, "It is a very difficult country to sell cars from outside. JLR, which we have now acquired, is setting up a plant in China because China wants those cars but not Tata Motors."
He said the Tata group would be looking to source automobile parts from China, which has made a lot of progress in the sector.
"If you look at what China has done in the automotive area in a short period of time, they have produced cars which in fact exceeds what India did in the same period of time," Tata said.
"We will now be sourcing sub-assemblies from China for Indian cars. We will buy things like automatic transmission, things which India doesn't yet produce...at prices that are unbelievable which will help us," he added.
On global economic scenario, Tata said it is "a little grim".
According to him, Europe and the UK will face a "hard recovery" and it is going to take "a lot of efforts, a lot of sacrifice, a lot of pain".
However, the US is going to recover faster than the Europe and "part of it going to be the innovativeness that is embedded in the US in the sense of entrepreneurship," he said.
Tata said there are opportunities in Asia, Africa and some parts of Latin America. "Asian countries may be finding more trade between themselves that they did before," he added.
"So you got a shift of industrial activity, economic growth moving to these so called South-South areas," Tata said.