"India has put a freeze on all new applications for new intended Australian parents wanting to engage in surrogacy," Sam Everingham from Surrogacy Australia said.
He said couples trying to embark on the surrogacy process are being denied visas, while those who have pregnant surrogates in India are facing long delays in having their visas issued.
In a statement to surrogacy advocates, the Indian Consulate in Sydney said the cause of the current visa delays is over its concern for the welfare of surrogate children born for Australian parents.
It was recently revealed that in 2012 an Indian surrogate gave birth to twins for an Australian couple who left one baby behind, saying they could only afford to take one child.
Indian authorities said they have asked Australia for clearer guarantees that children born under surrogacy arrangements will be granted Australian nationality.
The consulate said it will issue visas if those guidelines are met.
Mr Everingham is concerned couples who had planned to engage in surrogacy in India may look to countries with less established industries, potentially putting all parties at risk.
India has guidelines for the surrogacy industry but no laws to enforce them.
Legislation to regulate the industry has been sitting in parliament for several years.