Amnesty International accused the Modi government of "targeting" activists and protest groups for "political ends".
The Indian government "failed" to address increasing attacks on religious minorities and imposed restrictions on civil society groups critical of it, two leading global human rights groups said on Wednesday.
Human Rights Watch and Amnesty International also slammed the government for blocking foreign funding and targeting non-governmental organisations as well as activists.
Prime Minister Narendra Modi's government "failed to address increasing attacks on free expression and against religious minorities," HRW said in its World Report 2016.
In the 659-page report, it said authorities blocked foreign funding and increased restrictions on civil society groups critical of the government or large development projects.
"The Indian government's clampdown on dissent this year undermines the country's long and rich tradition of free expression," said Meenakshi Ganguly, HRW South Asia director.
"Instead of denial and retaliation, the authorities should encourage tolerance and peaceful debate and prosecute those committing or inciting violence," she said in a statement.
It said authorities used sedition, criminal defamation, and hate speech laws to harass and prosecute those expressing dissenting, unpopular, or minority views.
The government often allowed a "heckler's veto" to interest groups claiming to be offended by books, movies, or artwork and pushed for censorship or otherwise harassed authors, the statement added.
"In a worrying trend, anti-Muslim rhetoric by some leaders of the ruling Bharatiya Janata Party (BJP) stoked insecurities among religious minorities," it said, citing the killing of four Muslims by mobs over suspicion that they had killed or stolen cows for beef.
The HRW said that the government blocked foreign funding for organisations such as Greenpeace India and targeted several others, including the Ford Foundation.
It said authorities labeled activists such as Teesta Setalvad and Javed Anand "anti-national" when they sought justice for victims of the 2002 communal riots in Gujarat.
"Such tactics had a chilling effect on the work of other groups," the statement said.
Amnesty International accused the Modi government of "targeting" activists and protest groups for "political ends".
The People's Watch's "bank accounts have been frozen repeatedly since 2012 with the result that some employees had to be dismissed and many programmes abandoned," Amnesty said.
"The Delhi government in power at the time used the Foreign Contribution Regulation Act to justify this kind of harassment," it said in a release.
"This same Act is being used for political ends by the current government under Prime Minister Narendra Modi," Amnesty added.