The 37-year-old actress, who has appeared in Bollywood movies, said that the allegations could harm the career she had spent 10 years building in India.
"Perhaps I do feel like I need an apology because not only my family name but my career which I have worked very hard for is suddenly at stake here," News.com.au quoted her as saying.
"When things like this get into countries like that (India) it's not taken lightly.
"Sex scandals - rumoured, alleged, bad chinese whispers, whatever it is - aren't taken lightly in a country like that," she added.
Zaetta has been accused of having sex with Australian special forces soldiers during a recent tour of war-ravaged Afghanistan.
However, the actress strongly denies it. The Defence department is investigating the allegations.
"That is the most ridiculous story I've ever heard about my life - and I've heard plenty over the years in this industry," Zaetta told Daily Telegraph.
The department has been severely embarrassed after admitting it broke privacy rules by naming Zaetta in a briefing document to the Minister for Defence Joel Fitzgibbon.
The federal Opposition has demanded an apology from Mr Fitzgibbon for the "gross" and "extraordinary" invasion of Zaetta's privacy.
Opposition defence spokesman Nick Minchin has demanded an explanation from the Defence Minister.
"This is a gross invasion of her privacy," he said on Fairfax radio.
"It is very unfortunate and I think Mr Fitzgibbon, as the Defence Minister, should come out today and explain exactly how this has occurred.
"He should apologise publicly to her. This is an extraordinary invasion of her privacy. He has got some answers to provide," he added.