Polling booths opened at 07:00 (01:30 GMT) on Monday in more than 135 constituencies for the third round of the vote, from the financial hub of Bombay to the bellwether northern state of Uttar Pradesh and the violence-hit Kashmir Valley, the heart of Jammu and Kashmir.
Although Prime Minister Atal Behari Vajpayee Bharatiya Janata Party-led coalition is expected to win another five-year term, opinion polls show the once dominant Congress party has narrowed the gap.
Uttar Pradesh and neighbouring Bihar, also voting on Monday, account for 120 of the federal parliament's 545 seats and are seen as critical to victory.
Security is tight in Kashmir, where rebels fighting Indian rule have called for a boycott of the election.
On Sunday, suspected separatists threw a grenade at the popular head of the state's ruling People's Democratic Party, Mehbooba Mufti. She escaped unhurt, but at least three people died and almost 50 were injured.
More than 670 million people are eligible to vote in the five-stage poll that ends on 10 May. Votes will be counted on 13 May and results are expected on the same day.