The protests by hundreds of students in New Delhi on Tuesday came a day after the Indian cabinet approved a draft law to boost the number of university places allotted to lower caste candidates to 49.5% from 22.5%.
Lower castes account for about 77% of India's 1.1 billion population.
The protesters said that the government's proposal does not reward merit and will reduce their chances of gaining a higher education.
The violence began after hundreds of students began marching to the house of Sonia Gandhi, head of the ruling Congress party.
They broke through a police cordon which led to a scuffle with policemen. Police then fired tear-gas shells and used water cannons to push the students back.
A leaflet distributed by the protesters said a nationwide strike would be launched within 24 hours of a bill being tabled.
The bill is expected to be placed before parliament this week.
The controversial proposal, which faced similar nationwide protests when it was first mooted four months ago, affects federally funded universities, medical, engineering and management schools.
Impoverished and underdeveloped India introduced reservations for the lower castes soon after independence from Britain in 1947, but the present bill widens the scope of earlier laws.
In 1990, a similar move to increase quotas in government jobs also led to widespread protests in which dozens of upper-caste students deliberately burnt themselves to death.
India's predominantly Hindu society is riven with social divides ranging from high caste priestly Brahmins to low caste "untouchables".