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The accident happened when the driver apparently lost control and veered off the road into Purna river in Navsari district, 180 miles (285km) from Ahmedabad, the main city of Gujarat state.
A police superintendent said: “Twenty bodies have been taken out from the river after the bus fell off a bridge near Supa village.
“The bus was going from Navsari to Ukai when the accident took place. We do not know the exact number of people travelling in the bus, but it is said that it was full.”
He said police, fire brigade and ambulance services were engaged in a rescue operation at the scene.
A senior administrative official for Gujarat state later told AFP the number of dead had risen to 37 and that “at least” 24 others had been taken to hospital for treatment.
Television images showed locals and rescuers in the water, shifting parts of the bus wreckage with their bare hands and carrying people to ambulances in bedsheets.
Gujarat’s chief minister Anandiben Patel tweeted: “Deeply pained to learn about the unfortunate bus accident on Purna River Bridge in Navsari. My prayers are with victims & their families!”
The Gujarat government announced 400,000 rupees ($5,900) in compensation for the families of those killed.
Fatal traffic accidents are common in India, which has some of the world’s deadliest roads.
In October, 15 members of a wedding party, including three children, were killed when a vehicle they were travelling in collided with a bus in the south of the country.
In 2013, a speeding bus exploded in a ball of flames after crashing into the central reservation of a southern Indian highway, killing 45 passengers as they slept.
According to the World Health Organisation, there are more than 230,000 fatalities in India every year.
Transport analysts say it is because of poor roads, badly-maintained vehicles and reckless driving.
The government has put forward proposals to make roads safer by toughening up lax traffic regulations.
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