In an interview with the Press Trust of India Mr Obama talked of concerns about the “deteriorating investment climate”.
Corporate Minister Veerappa Moily said Mr Obama was “not properly informed” and blamed “international lobbies” for spreading negative information.
India has been struggling to cope with a slowing economy.
The latest figures show it grew at an annual rate of 5.3% in the first quarter of 2012, the slowest pace of growth for nine years.
MPs from several opposition parties also criticised Mr Obama for his remarks.
“If Mr Obama wants FDI [foreign direct investment] in retail and India does not want, then it won’t come just because he is demanding it,” Bharatiya Janata Party leader Yashwant Sinha said.
Many in the US business community have expressed concerns that the investment climate in India is deteriorating, PTI quoted Mr Obama as saying.
The US president said India “continues to grow at an impressive rate”, but “there appears to be a growing consensus in India that the time may be right for another wave of economic reforms to make India more competitive in the global economy”.
Apart from a slowing growth rate, rising prices and sluggish industrial production have also been a source of concern for the government. And several key reforms have been held up because of opposition from the government’s allies.
Last year, Prime Minister Manmohan Singh was forced to reverse a decision to allow foreign direct investment in the $450 billion retail sector after Trinamool Congress, a key ally of the government, opposed the proposal.