US Ambassador Richard Verma further said citizens have a "inalienable right" in a democratic society to argue peacefully and ask questions or challenge laws.
"I read with some concern the recent press reports on challenges faced by the NGOs operating in India. 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.
In a crackdown on NGOs allegedly receiving illegal foreign funds, the government last month had cancelled licences of nearly 9,000 such entities for violation of the Foreign Contribution Regulation Act (FCRA).
The US-based Ford Foundation has also been put on the 'watch list' by the Home Ministry, which directed that funds coming from the international donor should not be released by any bank to any Indian NGO without mandatory permission from it. The government had also barred Greenpeace India from receiving foreign funds with immediate effect.
"I also know there will be times when we disagree, and I look forward to those conversations, too. Yes, I look forward to the tough discussions because my argument is not that our two sovereign countries must be exactly the same," he said.
After the Ford Foundation was put on the watch list, the US State Department had protested and the issue was also reportedly raised by under secretary for political affairs Wendy Sherman during her meetings with senior Indian officials here last week.