The proposals were announced as part of India’s federal budget last month.
The associations warned that the firms they represent could reconsider their business ventures in India.
The government has been involved in a long-running fight over taxes with the London-listed Vodafone group.
In January, the Supreme Court ruled that Vodafone was not liable for taxes and penalties of up to $4.4bn (£2.8bn).
Vodafone said it did not owe tax on the deal, as the assets were held by a firm based in the Cayman Islands.
The letter to Prime Minister Singh was signed by seven leading industry associations from the US, UK, Japan, Canada and Hong Kong.
Together they represent more than 250,000 companies, including several top global corporations.
“The sudden and unprecedented move in the Bill [Indian budget] has undermined confidence in the policies of the government of India toward foreign investment and taxation and has called into question the very rule of law, due process, and fair treatment in India,” the letter said.
“This is now prompting a widespread reconsideration of the costs and benefits of investing in India,” it said.
The letter said said some member companies had “already begun re-evaluating their investments in India due to increasing levels of controversy and uncertainty regarding taxation in recent years”.