Indian Medical Association (IMA) President K K Aggarwal, also a cardiologist, said the government decision was "not in the interest of society".
"I personally feel it was wrong. The government has taken a wrong decision... For a mistake that occurred at the level of a doctor, the licence of the hospital cannot be cancelled," he said.
In a statement released hours after the announcement by the Delhi government, the IMA said it was "too harsh a step", and that action should be taken against those people who are at fault.
"Mistakes occur even at premier government hospitals such as AIIMS and Safdarjung Hospital," the IMA chief said.
"If government starts cancelling the licenses of hospitals in such a manner than all the healthcare facilities will have to be shut down," he said.
The Delhi government today cancelled the licence of Max Hospital, Shalimar Bagh, with immediate effect, for alleged medical negligence, including in the twins case in which one of the babies was found alive after being wrongly declared dead by the doctors.