Forty Indian citizens working for a Turkish construction company near the Iraqi town of Mosul have been kidnapped, India's Foreign Ministry said.
Ministry spokesman Syed Akbaruddin said there had been no contact with the kidnappers, and no ransom demand had been received.
He said the workers were mostly from northern Indian states including Punjab and had been working for the Tariq Noor al-Huda construction company in Iraq.
There are about 10,000 Indian citizens working and living in Iraq, but only about 100 are in violent, insecure areas, he said.
That includes 46 Indian nurses working in a hospital in the Iraqi town of Tikrit, but Mr Akbaruddin said humanitarian organisations had been in touch with them and they were all safe.
"We are willing to assist any of the nurses who wish to return to India," he said, adding that several had expressed a desire to stay in Iraq but wanted to move to safer areas. They have all been advised to avoid travelling by road.
India has sent a senior diplomat to Baghdad, and planned to bring back some citizens on Friday.
The government also opened a call centre to take phone calls from worried families with relatives in Iraq. By Wednesday afternoon, it had received 60 calls.
National broadcaster NDTV showed a recording of a phone call with one of the nurses in Tikrit on Tuesday.
"We are afraid. We have no security here," a woman identified as nurse Marina Jose said over a crackling phone connection. "All the military, police, everybody escaped from here. Only we are here."
She said the nurses were in touch with their families, most of whom are in the southern Indian state of Kerala.
Militants have seized wide swaths of territory in Iraq, although the prime minister said that government forces have begun a counteroffensive.