Indian police arrested a regional Hindu leader suspected of inciting violence against north Indian migrant workers in Mumbai, the financial capital, on Tuesday. The arrest came amid growing calls from Indian secularists to take a harder line on rightwing Hindu nationalist organisations.

Raj Thackeray, head of the small but vocal regional party Maharashtra Navnirman Sena (MNS), was charged with rioting and assault for allegedly encouraging his supporters to attack the migrants who were trying to sit an Indian Railways recruitment examination. Among the assault victims, one died from his injuries, Indian television reported.

The arrest of Mr Thackeray – who is the nephew of local rightwing power broker Bal Thackeray – follows a warning from Manmohan Singh, the prime minister, that ethnic and religious chauvinism was threatening India’s pluralism, democracy and economic development. Rightwing Hindu nationalist organisations have fomented brutal attacks on religious minorities, including Christians, in recent weeks.

Mr Thackeray and his supporters are violently opposed to the inflow of migrants from other parts of India – particularly from the impoverished north – to the state of Maharashtra, blaming the “outsiders” for pushing down wages and taking jobs from locals.

Following Mr Thackeray’s arrest, hundreds of his enraged supporters fought battles with police outside the court where the leader was held, while others rampaged through the streets, smashing taxis with rocks and stones, damaging cars, and terrorising cabbies, many of whom are themselves migrants.

Vilashrao Desmukh, Maharashtra’s chief minister who was criticised for the weak state response to the violent attacks on Sunday, said the arrest showed that “acts of intolerance will not be tolerated”.

Gerson da Cunha, director of Action for Good Governance and Networking in India, said: “The problem is the state’s inability to enforce the law. If the government doesn’t act quickly, Mumbai’s multicultural image will be badly damaged.”

As India’s main financial centre – and home to the thriving film industry, Mumbai attracts a steady flow of migrants from across India, striving to realise their dreams in the city. Many of Mumbai’s more than 17m people – including its leading tycoons and Bollywood stars – are not originally from the state of Maharashtra, and are not native speakers of Marathi, the local language.

However, the MNS has stepped up assaults on non-Marathi taxi drivers as well as workers at construction and manufacturing sites, sending many fleeing from the state.

Additional reporting by Varun Sood in Mumbai