WhatsApp, on its part, has maintained that messages on the platform are end-to-end encrypted and that neither WhatsApp nor Facebook can see the private messages on WhatsApp's platform.
In a strongly worded letter to WhatsApp CEO Will Cathcart, the Ministry of Electronics and Information Technology said India is home to the largest user-base of WhatsApp and is one the biggest markets for its services.
The ministry asked WhatsApp to withdraw the proposed changes and reconsider its approach to information privacy, freedom of choice and data security.
With over 400 million users in India, the changes will have a disproportionate impact on the country's citizens, the Centre noted. It also asked WhatsApp to provide details of the services provided by it in India, categories of data collected and permissions and consents sought.
It has also been asked the platform to detail data sharing with other apps and if it captures information about other apps running on the mobile phones of the user.
Besides, complete technical architecture and server hosting data of Indian users have been asked to be furnished along with details of access to a third party.
The changes "enable WhatsApp, and other Facebook companies, to make invasive and precise inferences about users which may not be reasonably foreseen or expected by users in the ordinary course of assessing these services,” the ministry said.
The updated terms would enable WhatsApp to collect "highly invasive and granular metadata" such as time, frequency and duration of interactions, group names, payments and transaction data, online status, location indicators as well as any messages shared by users with business accounts.
"The collection and onward sharing with Facebook companies, of sensitive personal data of individuals portends an ecosystem where any meaningful distinction between companies and WhatsApp will cease to exist," it noted.
"This approach has the potential to infringe on core values of data privacy, user choice and autonomy of Indian users," the ministry said.
Meanwhile, speaking at the 15th India Digital Summit, Communications, Electronics and IT Minister Ravi Shankar Prasad noted that national security will be central with regard to exposure of international companies, including those based in China.
"This is an issue that my department is (working) on, and being the final authority, it will not be proper for me to make comments. But except to flag one thing very clearly. Be it WhatsApp, be it Facebook, be it any digital platform. You are free to do business in India but do it in a manner without impinging upon the rights of Indians who operate there," Prasad said.
He added that the sanctity of personal communications needs to be maintained. "I've only spoken on principles, given that my department is working. I have to await that," he said.
However, WhatsApp drew flak from users across the globe, including India that ranks among the biggest markets for WhatsApp with over 400 million users.
Following this, WhatsApp has now decided to delay the rollout of its new policy update to May 15, and said it will "do a lot more to clear up the misinformation around how privacy and security works on WhatsApp".
WhatsApp had also stated that it is open to answering any questions from the government on the issue and that it remains committed to the privacy and security of users across India.
(With PTI inputs)