Speaking at the launch of a book '1962 The War That Was Not', authored by Shiv Kunal Verma, the ex-army chief also said India will not suffer a 1962-like defeat if it remains alert.
Besides Singh and Verma, the event was attended among others by BJP leader Subramanian Swamy.
"There is a need for overhaul in the defence system. Many people have spoken about it for three-four decades. But we have been only talking about it. Now the time has come that, if people are feeling so for three-four decades, why don't we act on it?
He said there is a "psyche" prevailing in India since independence that armed forces are "naughty boys" who will do something and that they need to be kept under "total control".
The psyche "got perpetuated" over a period of time by the way country's political leadership looked at neighbouring countries and what happened there, he said apparently hinting at Pakistan where the military has often seized power since its independence.
He also questioned the rules of business in the country which make the Defence Secretary, who he said is "not a specialist", responsible for country's defence.
The former Army chief said there will not be a repeat of 1962-like defeat if India remains alert today.
"The reason behind our defeat was the kind of foreign policy we had. The problem crops up when any leader grows too big when none can question him. Things won't improve in any country, organisation until there is room for pointing out mistakes, accepting those and start bringing in changes," he said without naming Jawaharlal Nehru.
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"They are vulnerable, their economy is not doing as well as before and they are vulnerable from the sea, particularly since most of the their freight traffic goes through Malacca strait and if we have a good relationship with Indonesia, we can create a lot of problems for their exports. We have the capacity to take on the Chinese, if necessary," Swamy said.
The BJP leader noted foreign policy is based on intentions and India should pursue its policy of friendship with the Chinese, but cautioned the country to "not forget that defence policy is based on capacities".
