"Now, if Sachin was living in Australia -- give him the Prime Minister's gong I reckon -- but the reality of it is he's living in India," Hayden told a radio show.
Australian Prime Minister Julia Gillard announced the honour for Tendulkar during a recent visit to India. Hayden, who is also a former recipient of the title, said only Australians should be conferred with such awards as they are about national honour.
"I think it should be exclusive to Australians...I'm not so sure. There's things that are sacred amongst our country," Hayden said.
Former Australian batsman Mathew Hayden
"I kind of understand the point of the fact that he has been such an iconic figure here in Australia and there's an enormous population of Indians that are working here and living here very happily and in harmony with Australia that have naturalised and I think that's a great part of our country, how multi-cultural that we are," he explained.
Tendulkar is only the second Indian after former attorney general Soli Sorabjee to get the honour.