The US ambassador to New Delhi rebuked India's right-wing government Wednesday for a crackdown on non-governmental organisations, saying it could have a "chilling effect" on civil society.

After both Greenpeace and the US Ford Foundation were hit with funding restrictions, ambassador Richard R. Verma voiced rare public criticism by Washington of Narendra Modi's administration, in a speech on India-US relations.

"I read with some concern the recent press reports on challenges faced by NGOs operating in India," Verma said.

"Because a vibrant civil society is so important to both of our democratic traditions, I do worry about the potentially chilling effects of these regulatory steps focused on NGOs."

Verma said civil society organisations were an integral part of the struggle for advances in health, inclusive economic growth, environmental protections, human rights and the strengthening of democracy.

The criticism is particularly striking at a time of closer ties between the world's two largest democracies, exemplified by the warm reception that US President Barack Obama received on a visit in January.

But it comes after the government barred the Ford Foundation from giving money to local organisations without its permission, placing it on a "watch list" to ensure funds are used for "bona fide welfare activities without compromising on concerns of national interest and security".

The move late last month followed a complaint from the government of the western state of Gujarat over the foundation's grants to an NGO run by a longtime critic of Prime Minister Modi.

The government also recently suspended Greenpeace India's foreign funding licence after accusing the environmental pressure group of hurting the country's economic interests. Greenpeace India warned on Tuesday that it may be forced to shut down its operations in the country within a month.

Last week India's home ministry said it had recently cancelled the foreign funding licences of nearly 9,000 NGOs, claiming they had failed to file annual tax returns.