A Tibetan activist unfurled a Tibetan flag and then set himself on fire outside Taj Hotel in Mumbai where Chinese President Hu Jintao was staying to protest Chinese rule in the Himalayan region.
Police said Hu and his staff were inside the hotel at the time of the incident.
The man and six other Tibetan youths drove up to the hotel in two taxis, jumped out and began chanting slogans against China's occupation of Tibet. He then doused his pants with a liquid and set them on fire, according to an Associated Press photographer at the scene.
Several policemen quickly jumped on the man, rolled him on the ground and doused the flames.
Police took all seven men away.
Mumbai police commissioner AN Roy said the activist was not seriously wounded. "Doctors are monitoring his condition," Roy said.
He also denied there had been a breach of security. "The hotel has been secured since Wednesday night. This took place outside the barricades," he said.
After the incident police cordoned off adjacent roads to the hotel.
Separately, some 250 Tibetans held a protest in another part of Mumbai, chanting "Free Tibet" and "Down with China." India became a centre for Tibetan exiles after their spiritual leader, the Dalai Lama, fled there in 1959 after a failed uprising, settling in the northern town of Dharmsala.
Indian police have taken strong measures to prevent protests near Hu that could embarrass the Chinese leader.
Last week police barred a prominent Tibetan activist, Tenzin Tsundue, from leaving Dharmsala during Hu's visit. Tsundue has a reputation for publicity stunts that have embarrassed previous Chinese visitors and Indian police.
Police also barred gatherings of more than five people at places Hu was scheduled to visit while in New Delhi earlier this week.
Most Tibetans say China has attempted to destroy Tibetan Buddhist culture by flooding Tibet with China's ethnic Han majority. The protesters have singled out Hu, who governed the Tibetan region between 1988 and 1992, saying he had adopted a repressive stance toward the region.