His remarks came in reaction to the statement by Army Chief Gen Dalbir Singh that India is prepared for "swift and short" wars in the future.
Participating in a Radio Pakistan programme, Asif said Pakistan believes in peace but knows how to respond to any aggression.
"We want peace but will inflict heavy losses on India if war hysteria overcame its leadership," he said.
Commenting on Indian Army Chief's remarks, he said, "Pakistan is fully prepared to give a befitting response if India imposed short or prolonged war."
Talking about previous wars, he said Pakistan armed forces "foiled designs" of Indian forces in 1965.
"Our forces crushed the Indian dreams of occupying Lahore back in 1965 and will do the same in future," he said.
The defence minister also said Pakistan Army was now more experienced and professional than 50 years ago.
"Our forces are engaged in the war against terror for several years and they know how to respond to any challenge," he said.
Asif, however, said Prime Minister Nawaz Sharif believes in peace.
The remarks come against the backdrop of heightened tensions and cross-border firing between Indian and Pakistani troops along the LoC recently.