The ferry sank Monday evening as it sailed along the Brahmaputra River in Assam, the state's home commissioner Jishnu Barua said.
Barua said 90 people have so far been rescued, while 40 bodies have been recovered. Divers have been deployed to search for more victims.
The vessel apparently broke apart when it was about to dock after a storm, Barua said. He added that it was overcrowded and carrying around 300 passengers -- more than its capacity of 280.
"I could see people being swept away as the river current was very strong," Rahul Karmakar, who witnessed the disaster, told Agence France-Presse. He added that "chances of survival seem to be remote" in the river, swollen by the heavy rains.
The ferry was from Dhubri, some 186 miles (300 kilometers) from Assam's biggest city, Guwahati, to Fakirganj, AFP said.
Indian Prime Minister Manmohan Singh called the sinking a "tragedy." In a statement he said he was "shocked and grieved to know about the loss of lives," adding that he had given instructions "for all possible assistance to the government of Assam in relief operations."
Boat accidents are nothing new in remote areas of India, where ferries are often overcrowded and in poor condition due to lax safety standards.
In 2010, a boat packed with Muslim pilgrims capsized in West Bengal in eastern India, killing at least 79.
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