"The aspect of some (Pakistani) troops coming towards the east... we are aware of it. That has happened. They have come to the eastern border of Pakistan with India," General Deepak Kapoor told a news conference.
"However having known this fact, let me assure you that the Indian army has factored this in its planning," he added. "That is not something which is a cause of concern for us."
Tensions between the two nuclear-armed rivals dramatically escalated after India accused "official agencies" in Pakistan of involvement in the November 26 Mumbai attacks in which 174 people, including nine gunmen, were killed.
Pakistan has strongly denied that accusation.
But senior defence and security officials in Pakistan had said late last month that troops were being moved from the northwest tribal areas bordering Afghanistan, hotbeds of Taliban and Al-Qaeda activity, to the eastern border near India.
The chief of India's 1.3-million strong army conceded the tensions between the two countries, who have had three wars since their 1947 independence, were high.
He did not say if India had also bolstered its troops along the already heavily-militarised border, including the tense Line of Control that divides the disputed Himalayan region of Kashmir.
"There has been been larger amount of tensions since 26/11 because we do feel that the perpetrators came from Pakistani soil," Kapoor said.
"In view of that we in India are keeping all our options open and that must be clearly understood," the general said.
"It is not to raise any kind of hysteria for war... but I am referring to the keeping of all our options open -- whether diplomatic, economic or, as the last resort, a fighting option," he said.
The nuclear-armed South Asian neighbours -- which have fought three wars since independence from Britain in 1947, two of them over Kashmir -- have said they do not want to go to war again.
However India has accused Pakistan of failing to take serious action against the alleged plotters of the Mumbai attacks, and continues to pile political and diplomatic pressure on its arch-rival.