Ignoring the issue is undermining efforts to combat AIDS in India, the group said.
More than five million people are thought to be living with HIV/AIDS and putting millions more lives at risk in India, the New York-based organisation said in a report on Thursday.
"Children are being turned away from schools, clinics and orphanages because they or their family members are HIV-positive," HRW's Zama Coursen-Neff said.
"If the Indian government is serious about fighting the country's AIDS epidemic, it should stop ignoring children affected by AIDS and start protecting them from abuse."
India's health ministry did not return calls requesting comment on the report.
Lack of information
India has the largest number of people living with HIV/AIDS outside South Africa, and experts fear it could soon vault to the top of the world's list.
Knowledge and information about the illnesss is still scant, and most Indians who are infected do not know.
"When I went to school, I sat separately from the other children...
I sat alone"
10-year-old HIV-positive patient
Hundreds of thousands of children in India live with HIV/AIDS, while many more are orphaned or forced to withdraw from school to care for sick parents.
Yet they are "nearly invisible" in the government's response to the epidemic, HRW said.
Many doctors refuse to treat or even touch HIV-positive children. Some schools expel or even segregate children because they or their parents are HIV-positive, it said.
The report documented cases such as 10-year-old Sharmila, who was HIV-positive and had lost both her parents to AIDS.
"When I went to school, I sat separately from the other children...I sat alone," she said. "The other children wanted to be with me but the teacher would tell them not to be with me."
When she developed tuberculosis, Sharmila began travelling four to five hours in the southern state of Tamil Nadu to reach a government-run hospital for free medical care, but it did not provide anti-retroviral drugs.
She died in January.
Six-year-old Anu was sent home from kindergarten in the western state of Maharashtra after her parents died of AIDS and teachers suspected she also had the illness. A private doctor told her family not to bring her to his clinic "because if you do, other people won't come".
Reporters visited the only home for infected children in the nation's capital, New Delhi, where just 14 children aged from one to 12 are being looked after. Similar centres around the country can be counted on the fingers of one hand.
Drop in the ocean
"It's a drop in the ocean compared to the numbers affected," said Irfan Khan of Naz India, which runs the home with funding from American actor Richard Gere's foundation.
Even though India has vowed to provide
anti-retrovirals, it is difficult to obtain
A one-year-old girl smiled and played near Khan as he spoke, a victim of discrimination before she was even born. Her HIV-positive mother was thrown out of a Delhi hospital just as she was about to give birth, and died a few months later.
HRW said many orphanages rejected HIV-positive children. Children from families afflicted with AIDS are often denied an education, pushed onto the street or forced into child labour,
putting them at a greater risk of contracting HIV themselves.
Street children, child sex workers and children from the lower castes in India's age-old classification system of social groups suffer even more. Sexual abuse and violence against women and girls makes them especially vulnerable.
Yet AIDS education is offered by fewer than half of all secondary schools, from which most children drop out. The government is also "utterly failing" to provide information to millions of children who are not in school but on the streets, at work or at home, the report said.
"Many teachers, doctors, government officials and ordinary people in India still don't know the basic facts about HIV transmission and AIDS," Coursen-Neff said.