Teesta Setalvad is accused of tutoring witnesses, forging the documents and fabricating evidence in cases pertaining to the riots in Gujarat when Modi was state chief minister, according to police documents seen by Reuters.
A lawyer for Setalvad could not immediately be reached for comment.
Modi was accused of failing to stop the rioting when at least 1,000 people died under his watch. He denied the accusations and was exonerated in an Indian Supreme Court inquiry in 2012. Last week, the Supreme Court dismissed another petition questioning his exoneration.
Setalvad, a leading rights activist, was detained from her residence in Mumbai on Saturday by police from Gujarat, taken to the neighbouring state, placed under formal arrest and sent to police custody until July 2.
"Just because activists like her are fighting in the court of law, doesn't mean they should be put behind bars," Nooruddin Naik, a protester, told the media.
Protesters carrying placards and posters of Setalvad shouted slogans against Modi and his party, the BJP.
Meanwhile "Teesta" was a top trending topic on Twitter on Monday.
Her arrest was condemned internationally as well, and Mary Lawlor, the U.N. Special Rapporteur on Human Rights Defenders, said she was "deeply concerned" over Setalvad's detention.
"Teesta is a strong voice against hatred and discrimination. Defending human rights is not a crime. I call for her release and an end to persecution by Indian state," she said in a tweet.
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