Seven people were killed and over 70 injured in rioting in Nuh and Gurugram districts of Haryana state after a Hindu religious procession was targeted and a mosque attacked in retaliation.

The 48-hour cycle of violence which was put out on Wednesday has brought to the fore Hindu-Muslim tensions brewing in the region since 2015, a year after the Hindu nationalist Bharatiya Janata Party (BJP) captured power nationally and in Haryana.

The lynching of two Muslim men in the region earlier this year by suspected Hindu vigilantes and the failure to nab the main suspect had worsened tensions, with the main suspect saying on social media that he would participate in the Hindu procession this week.

Ultimately he did not show up, police said.

"It has been shocking to see how distrust between two communities spilled onto the streets," Haryana's home (interior) minister, Anil Vij, told Reuters.

"Security has been restored...bringing relief and social harmony will take time," Vij said, adding that authorities understand safety concerns of businesses in Gurugram.

Gurugram, formerly known as Gurgaon, is a city of over 1.5 million people that shares a border with New Delhi.

A new urban centre with glitzy high-rises, luxury hotels, malls and gated condominiums, it is home to multinational firms, large Indian corporates and start-ups, with 250 of the Fortune 500 companies having offices here.

Among the multinationals with offices here are Google, American Express, Dell, Samsung, Ernst & Young and Deloitte. Suzuki's main India plant is also located near Gurugram.

Because of the violence, many companies allowed employees to work from home on Tuesday while schools and colleges were shut before resuming classes on Wednesday.

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In the past, Gurugram has witnessed tensions over Muslims holding Friday prayers in public spaces and meat sales during Hindu festivals, which Hindu groups wanted banned to respect Hindu sentiment.

Clashes between India's majority Hindus and minority Muslims break out occasionally, but have been less frequent since Prime Minister Narendra Modi's BJP government took power in 2014.

But tensions between the communities have risen, with many Muslims saying they live in fear as Hindu activists have become emboldened by the BJP's politics.

"Muslim men attacked the Hindu procession and killed many of our people," said Praveen Babbar, a leader of Hindu Yuva Vahini (Hindu Youth Force).

"Every action will have not just equal, but sometimes even more brazen reaction," he said.

Aftab Ahmed, Nuh's state lawmaker from the opposition Congress party, blamed local police for not acting fast enough even though he had alerted them about "provocative statements" being made by Hindu leaders.

Haryana Police, however, said they acted swiftly and prevented riots from spreading, and that two of its men were killed in the violence.

Analysts said the violence is worrying for the message it sends to businesses at a time New Delhi is seeking more investment under its "Make in India" campaign.

"Official reaction was inexplicably slow," said Tara Kartha, distinguished fellow at the New Delhi-based Institute of Peace and Conflict Studies.

"The commercial heart of north India was a target this time. It should have been prevented."