A US government panel has called for India to be put on a religious freedom blacklist over a “drastic” downturn under the prime minister, Narendra Modi, triggering a sharp response from New Delhi.

The US commission on international religious freedom recommends but does not set policy, and there is virtually no chance the state department will follow its lead on India, an increasingly close US ally.

In an annual report, the bipartisan panel said that India should join the ranks of “countries of particular concern” that would be subject to sanctions if they do not improve their records.

“In 2019, religious freedom conditions in India experienced a drastic turn downward, with religious minorities under increasing assault,” the report said.

It called on the US to impose punitive measures, including visa bans, on Indian officials believed responsible and grant funding to civil society groups that monitor hate speech.

The commission said that Modi’s Hindu nationalist government, which won a convincing election victory last year, “allowed violence against minorities and their houses of worship to continue with impunity, and also engaged in and tolerated hate speech and incitement to violence”.

It pointed to comments by the home minister, Amit Shah, who referred to mostly Muslim migrants as “termites”, and to a citizenship law that has triggered nationwide protests.

It also highlighted the revocation of the autonomy of Kashmir, which was India’s only Muslim-majority state, and allegations that Delhi police turned a blind eye to mobs who attacked Muslim neighborhoods in February this year.

The Indian government, which has long been irritated by the commission’s comments, quickly rejected the report.

“Its biased and tendentious comments against India are not new. But on this new occasion, its misrepresentation has reached new levels,” a foreign ministry spokesman, Anurag Srivastava, said.

“We regard it as an organization of particular concern and will treat it accordingly,” he said in a statement.

The state department designates nine “countries of particular concern” on religious freedom – China, Eritrea, Iran, Myanmar, North Korea, Pakistan, Saudi Arabia, Tajikistan and Turkmenistan.

Pakistan, India’s historic rival, was added by the state department in 2018 after years of appeals by the commission, which was appalled by attacks on minorities and abuse of blasphemy laws.

In its latest report, the commission asked that all nine countries remain on the list. In addition to India, it sought the inclusion of four more – Nigeria, Russia, Syria and Vietnam.