The withdrawal came Tuesday after the publishers went for an out-of-court settlement with Dinanath Batra of Shiksha Bachao Andolan Committee who had filed a civil suit and two criminal complaints.
"The decision to withdraw the book is both alarming and depressing, as are the complaints which led to the withdrawal. Hinduism is a resilient and enduring religion and a way of life and it is difficult to imagine how it might be under threat from an individual book, however much one might agree or not agree with the contents," novelist Namita Gokhale said..
"The Indian tradition of `samvad` (communication) and `vad vivad` (debate), of dissertation through assertion and refutation, needs to be honoured. Banning books encourages a culture of self censorship that can be extremely harmful," she added.
The book was published in India in 2011, and a petition was filed saying it has "historical errors" and Doniger had given a pornographic twist to Hindu objects of worship.
Doniger is regarded as one of the finest scholars of Hinduism and is currently a professor of history of religions at the University of Chicago`s Divinity School.
Throughout this debate, Penguin India remained silent, and came under severe criticism.
Members of PEN All-India Centre in Mumbai and the PEN Delhi Centre said decisions like these undermine freedom of expression.
"Choosing to settle the matter out of court, instead of challenging an adverse judgment, narrows India`s intellectual discourse and significantly undermines freedom of expression," the statement said Wednesday.
"We do not know why Penguin took the decision and expect the publisher to be transparent about the circumstances in which it made the decision, which comes at a time when Indian publishers have faced waves of threats from litigants, vigilante groups and politicians," it added.
Author Manreet Sodhi Someshwar said it was a shame to curb freedom of expression in a democratic country.
"It is an excellent book and gives the perspective into the Hindu faith from the lens of minorities, Dalits, women and animals," Someshwar, author of "The Long Walk Home",said.
"If you don`t like a book, don`t read it. Better still, come up with a superior argument," she added.
Author Anand Neelakantan, who has presented a reinterpretation of the Ramayana from Ravana`s viewpoint and is now doing the same with the Mahabharata from the Kaurava perspective, said people are angry because it is written by an "outsider".
"This uproar has more to do with Indian sensibilities who feel anything written by a western author is flawed.
There were no inaccuracies, it is just how you describe facts and are able to say things without tampering with history," he said.
"Our culture has always had such criticism of history and mythology in Indian writings, especially regional. It has more to do with the `outsider` image of the author," he added.
PEN All-India Centre also said removal of books from bookshops violates free speech and it strongly opposes these decisions.