Demands would be made later for their release, he added.
Mullah Ruazi Khan, who the government says was behind the abduction of a Turkish engineer on the same project in October, phoned Reuters to say the men were being held by guerrillas linked to the Taliban's former Defence Minister Mullah Ubaid Allah.
"The group which holds the two Indians will announce their aims at a later stage," he said. "As far as I know they are safe and in good condition."
The two Indians, identified by their embassy as Murali, a soil sampler and Vardharai, a foreman, were abducted in the province of Zabul on Saturday.
Both are 24 and are employed by BSC-C&C JV, an Indian firm contracted to Louis Berger Group Inc, the US company leading the project to renovate the Kabul-Kandahar road.
An Indian embassy official said it had heard no word from the kidnappers.
"We are looking into this seriously and are hoping to find any information we can," said foreign ministry spokesman Umar Samad.
Kabul-Kandahar Road Rehabilitation Project
Aims to grade, repair bridges and re-pave 299-mile highway linking Kabul to Kandahar
1st phase of paving to be completed by the end of 2003
$180 million road project funded by the US, Japan and Saudi Arabia
Reduced travel times to boost trade, movement of people and aid
2nd phase to reach Herat (west) by 2005
All equipment, most skilled labour and nearly all materials had to be imported
The roadway had to be cleared of mines before construction could begin resulting in several casualties
Building works further hampered by Taliban attempts of sabotage
"We have to wait and see who we are dealing with. But as a matter of principle, this government does not negotiate with terrorists."
The Indian workers were abducted in the same Shah Joy district of Zabul province where Turkish engineer Hasan Onal was kidnapped in late October.
Their abductions came exactly a week after Onal was released following a month's captivity.
Mullah Ruazi said at the time that Taliban leaders, including Ubaid Allah, freed Onal after the government let go two Taliban prisoners, but Kabul denied any deal. Roazi also said the main reason Onal was freed was that he was Muslim.
The kidnapping of the Indians is yet another blow to the road project, which has been hit by a wave of deadly attacks.
The United States has nevertheless vowed to finish by the year end what is the largest reconstruction scheme launched
since the overthrow of the Taliban in 2001.
Mullah Roazi also said the Taliban carried out a bombing in the centre of Kandahar at the weekend which wounded 18 people. He said the attack had been intended for US soldiers.
On Saturday, another Taliban official denied the group had carried out the attack.
Officials in Kandahar said five locals had been arrested in connection with the blast, several of whom were relatives of the renegade policeman who threw a grenade in the same marketplace last Wednesday, wounding two US soldiers.