India's ruling party was projected to lose a key state election on Tuesday, the vote count showed, in its first electoral test since deadly anti-government protests erupted nearly two months ago.

The Hindu-nationalist Bharatiya Janata Party (BJP) led by Prime Minister Narendra Modi won a bigger majority in a general election in May, but it has lost a string of state elections since then.

The protests, in which at least 25 people have been killed, erupted across the country in mid-December, after the BJP passed a new citizenship law critics say violates India's secular constitution and discriminates against minority Muslims.

In counting for state polls held in India's capital New Delhi, data from India's Election Commission showed the liberal Aam Aadmi Party, led by the city's chief minister, Arvind Kejriwal, leading 57 out of 70 seats.

The BJP ran a campaign accusing protesters of supporting India's arch-rival Pakistan and was projected to win 13 seats, up from three in 2015 but far below its own expectations. The party's local chief Manoj Tiwari had predicted it would win a majority.

AAP activists in distinctive white boat-shaped caps danced outside party headquarters in New Delhi as the result became clear, TV channels showed.

Neelanjan Sircar, an assistant professor at Ashoka University near New Delhi, said that local issues, including delivery of basic services like education and health, appeared to sway voters towards the AAP, even as the BJP ran a polarising campaign on the back of Modi's image.

"Modi is a larger than life character at the national level, which obviously gives the BJP a huge advantage in national politics," Sircar said.

Supporters of Aam Aadmi Party (AAP) celebrate after learning of the initial poll results outside its party headquarters in New Delhi, India, February 11, 2020. Photo: Reuters

"But it doesn't translate to state level politics, where the BJP often doesn't have a charismatic face."

Bespectacled former bureaucrat Kejriwal, 51, formed AAP in 2012 amid an anti-corruption movement that swept India.

The party won a stunning victory in 2015 state elections in the capital, wiping out the BJP and Congress, the party that has ruled India for half its post-independence history.

The Congress - the main opposition at national level - was projected to win no seats in Delhi on Tuesday, data showed, reflecting the deep decline in its fortunes.