Antiques more than 2,000 years old were found at the US citizen's premises in Mumbai.
A US citizen of Indian-origin was arrested for his alleged involvement in an international smuggling ring that illegally trades in artefacts believed to be looted from temples in India, police said.
Vijay Nanda, a US citizen of Indian origin, was detained by the police after they found antiques including terracotta figurines more than 2,000 years old at his premises in Mumbai, reported news agency AFP.
The idols, which investigators suspect were stolen from Hindu and Buddhist temples in southern and eastern India, were destined to be sold for vast sums to private collectors abroad, police said.
Antique smuggling is big business in the country. Smugglers target ancient temples located in remote areas that have been left abandoned without any security.
Officers said Mr Nanda was linked to the same syndicate as octogenarian art dealer G Deenadhayalan, who was arrested in Tamil Nadu last year for possessing hundreds of allegedly stolen artefacts.
"Vijay Nanda is a prime player in the international art smuggling syndicate with extensive connections in the US, Europe and Hong Kong," Directorate of Revenue Intelligence (DRI) said in a statement.
The DRI said the terracotta sculptures were found at Mr Nanda's home alongside bronze figurines of Hindu deities Ganesh and Mahishasura dating from the 17th and 18th centuries.
They also found six large stone statues in crates at a warehouse he owned. These included sculptures of god Vishnu and Buddhist idol Padmapani.
"These statues appear to be reliefs stolen/vandalised from various temples in eastern and southern India and belong to the 10th-11th Century A.D," read the DRI's statement, detailing the ring's modus operandi.
It said stolen idols were generally smuggled out of the country under fake documentation and concealed in furniture or garment consignments. Police said Mr Nanda would arrange their sale in the US and Hong Kong.
India is on a drive to bring back some of its most valuable antiquities. Last year the US returned more than 200 statues and other artefacts that were taken from Indian temples.
Former Manhattan art dealer Subhash Kapoor is currently on trial in the country for conspiring in the theft, trafficking and sale of religious artefacts.
He was the subject of a major US federal investigation known as Operation Hidden Idol and was arrested in Germany in 2012. He denies all charges.
(with inputs from AFP)