About 100 people were rescued from the ship carrying about 300 passengers, which sank during a storm in the Brahmaputra River, Assam police chief Jayanta Narayan Choudhury told Reuters.
Reports on the number of dead and missing varied immediately after the accident.
People were sitting on the roof of the ferry when it tipped over in a storm in a remote region of the state, close to China and Bangladesh, police said.
"Our rescue efforts have been hampered by bad weather, it is still raining heavily and there is almost zero visibility in the area," P.C. Saloi, a police officer at the scene, told Reuters. Rescue operations were called off late at night and were set to begin again at sun up.
Eyewitnesses told police the vessel was old and broke in two after capsizing in the swollen river, one of Asia's largest. Smaller boats often get into trouble on the river, but the ferry was the largest to sink in recent years.
"I could see people being swept away as the river current was very strong," a witness, Rahul Karmakar, told AFP.
The boat was overloaded with people and sacks of rice, among other goods, and carried no lifeboats or life jackets, the police officer told Reuters..
Prime Minister Manmohan Singh, who represents Assam in the upper house of parliament, said he was "shocked and grieved" by the accident.
Rescue workers said they had contacted colleagues downstream in Bangladesh to help in the search for survivors.
Reuters contributed to this report.
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