Police said 105 bodies, including many women and children, had been recovered so far from the fast-flowing river in Assam state, where the ferry was split in two during a sudden storm late Monday afternoon.
Despite an operating capacity of 225, some 350 people were believed to be on the two-deck boat when it broke up mid-river in torrential, pre-monsoon rains.
Police said some 150 people were rescued or swam to safety. The ferry carried no lifeboats or lifebelts and the chances of picking up more survivors after a night in the water were remote.
Many bodies are thought to have been washed far downstream by the Brahmaputra, which flows into Bangladesh and then out into the Bay of Bengal.
Two helicopters scoured the river from above as soldiers and police reinforced rescue teams, but continued heavy rains severely restricted the search operation.
"The weather is inclement and the river is rough so the rescue efforts are being hampered," state police chief J.N. Choudhury told AFP.
Taleb Ali, a 35-year-old villager who survived the sinking, said passengers had begged the skipper to anchor the ferry at a sandbar when the storm hit mid-stream, but he refused.
"Then the storm became more intense and the boat split into two parts before sinking," Ali told AFP.
Local fishermen, who live with their families in tiny hamlets stretching along the Brahmaputra -- which has a reputation as a treacherous waterway -- combed the shores for survivors.
Arun Kalita, a 30-year-old road construction worker who swam to safety, said, "I could hear many people screaming for God's help but it was a turbulent river and the storm was very severe."
"No one could come and rescue them," he said.
Strong winds had uprooted trees, blocking roads leading to the disaster site and preventing some rescue teams from reaching the area.
The death toll could make the ferry sinking one of the worst in recent memory in South Asia, where such disasters are common due to lax safety standards, recklessness and overloading.
Survivors said many passengers had continued to board the ferry even after the last tickets had been sold.
The bodies of the victims were being kept at a local hospital.
The boat was on its way from Dhubri, some 300 kilometres (190 miles) from the state's main city Guwahati, to Fakirganj.
Prime Minister Manmohan Singh called the sinking a "tragedy" and announced compensation would be paid to the victims' families.
He said in a statement that he was "shocked and grieved to know about the loss of lives" and added that he had given instructions "for all possible assistance to the government of Assam in relief operations".
Assam state chief minister Tarun Gogoi told the NDTV news channel that the final death toll was not yet known.
"The priority is the rescue work," he said. "We will then have a full inquiry."
In one of the last major ferry disasters in India, at least 79 Muslim pilgrims drowned when an overcrowded boat carrying 150 people sank in the eastern state of West Bengal in October 2010.
In March this year, some 138 people died in neighbouring Bangladesh when an overloaded ferry carrying 200 people sank in the Meghna river southeast of the capital Dhaka.