Mehdi Masroor Biswas, employed with an Indian food conglomerate in the southern city of Bangalore, is alleged to be the handler of the Twitter account @ShamiWitness.
The account had 17,700 followers, including many foreign fighters, until it was shut down following a report by Britain's Channel 4 News on Thursday.
Tweets from @ShamiWitness contained militant propaganda as well as information for would-be recruits and messages praising fallen fighters as martyrs.
"He has been taken into custody," police director general L R Pachuau told AFP.
Police raided his house in an upscale suburb of Bangalore early Saturday and seized "incriminating documents, Islamic literature and many photos", Pachuau said.
Pachuau added that details of his arrest would be revealed at a news conference later Saturday.
The Channel 4 report quoted Biswas as saying that he had personally not joined IS ranks in Iraq and Syria because his family was financially dependent on him.
"If I had a chance to leave everything and join them I might have," he was quoted as saying.
However, in an interview to the Indian Express newspaper published Saturday Biswas said his claims to Channel 4 were meant to get the television reporter off his back.
"When Channel 4 called me first and asked if @ShamiWitness was my Twitter handle, I did not oppose it... my outright rejection would not have convinced them. I therefore decided to admit that I was indeed @ShamiWitness in the hope that they would not air the programme," Biswas told the daily.
The Press Trust of India news agency said Biswas was likely to be charged with cyber terrorism and sentenced to life imprisonment.
The IS militant group has made extensive use of social media for propaganda and recruitment, as well as for disseminating grisly execution videos.
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These lost Tribes of fundamentalist should channelize their inspiration towards helping the poor and needy, helping in charity and development of Muslims, To forward the Nation of Islam to its true meaning. Not kill and destroy to achieve their distorted belief of Islam
He should be sent to Pakistan as he is a natural fit.
Goes to show, educated well to do impressionable minds too can get influenced by evil and the lure of crime.