The incident was reported from northern Uttar Pradesh state, where a mob recently murdered a 50-year-old Muslim man for supposedly eating beef -- a taboo in the Hindu-majority nation.
"A rumour spread (on Friday) that a cow has been slaughtered, after which some people beat up the men and resorted to arson," Chandrapal Singh, a senior administrative officer of Mainpuri district, told AFP.
Singh said a post-mortem of the cow showed it had been dead for a while owing to some ailment and the men were only removing its skin when they were attacked by the mob.
The incident adds to a raging row over what is seen as rising intolerance towards Muslims and other religious minorities since Hindu nationalist Narendra Modi stormed to power last year.
On Thursday, Modi appealed for religious unity, saying the nation would only prosper "when Hindus and Muslims unite and fight" against poverty, instead of against each other.
The Times of India Saturday said some 500 people armed with bamboo sticks and iron rods had set fire to shops belonging to Muslims before police dispersed the mob using tear gas.
The two men who were beaten up by the mob had sustained serious injuries and were recuperating in a hospital, the daily said.
Cows are considered sacred by most Hindus in officially secular India, although millions of Muslims and other minorities do eat beef.
Religious minorities have recently spoken of their fear of erosion of rights in the world's biggest democracy and called on Modi to rein in Hindu hardliners.
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