Four newborns died in a fire in the intensive care unit of Kamla Nehru Children's Hospital, a government hospital in Bhopal, in the central state of Madhya Pradesh.
The other 36 infants in neonatology, many of whom were born premature and underweight, were rescued by the fire brigade and transferred to other pavilions.
The images showing rescuers fighting the flames to save the children have kept the whole country in suspense.
The governor of the state, Shivraj Singh Chouhan, in a tweet said he was "heartbroken" and announced the opening of an investigation.
The government has allocated compensation equivalent to 4,000 euros for the parents of the children.
The incident is the latest in a sequence of fires in public hospitals that killed dozens of people in India this year, including many children.
(Unioneonline / vl)