An overcrowded boat which capsized off India's Andaman Islands with the death of 21 people was not carrying life jackets and rescuers did not arrive for two hours, officials and survivors said Monday.

A total of 29 people were plucked from the waters off the coast of the remote archipelago on Sunday afternoon and nine of them are now in hospital, according to the islands' information secretary Rakesh Bali.

The boat capsized less than a kilometre from shore, witnesses told AFP.

"Initial reports suggest that overcrowding caused the incident," Bali told AFP by phone from the Andamans, saying a more detailed investigation was under way.

Bali said all the victims were Indian tourists, most of them from the Kanchipuram district of Tamil Nadu on the mainland.

V. Narayanasamy, a minister in Prime Minister Manmohan Singh's office, told AFP that an investigation had been ordered by local authorities but the main causes of the disaster had already been established.

"I can confirm there were no life jackets on the boat and the amount of passengers that it was carrying was well beyond its capacity," Narayanasamy said.

"The inquiry will establish who was at fault and those responsible will receive the maximum punishment."

Families of the victims will receive some 200,000 rupees (around $3,200) in compensation, said the minister.

The boat's owner and crew were being held for police questioning and were likely to face charges over the tragedy, according to the island's top administrator, Lieutenant Governor Ajay Kumar Singh.

"The private boat owner and the crew have been held for questioning and in all probability they will be booked under section 304 of the Indian penal code (culpable homicide not amounting to murder) by evening," Singh told NDTV.

Denis Giles, editor of the Andaman Chronicle newspaper, said most of the survivors were picked up by fishermen who had seen the boat going down as the official rescue services took so long to reach the scene.

"It went down very fast," Giles said. "These fishermen immediately took out their small boats and reached the spot where they tried to save as many people as they could.

"The local marine rescue and coordination centre was informed but it reached the spot almost two hours late, around 4.50pm."

Singh rejected the charges, saying "there were no delays in rescue efforts, they began immediately."

A safety audit and review of standard operating procedures of all boats plying the islands have also been ordered, he said.

While the waters were not especially rough, survivors said some passengers fell victim to exhaustion as they waited to be rescued.

"The boat was obviously overloaded. As the water seeped in, the boat started sinking from the back. In less than ten minutes, the boat had sunk," G. Preethy, a survivor of the tragedy, told the Times of India.

"Some 12 of us held on to a raft for help to arrive. As time went by, many tired of holding the rope and let go. At the end ... only five of us were still holding on to the rope," she added.

The Andaman and Nicobar Islands, which comprise some 572 mainly uninhabited islands, are located between the Andaman Sea and the Bay of Bengal.

Though they are Indian territory, they are at least 1,000 kilometres (620 miles) from the mainland and are closer to the coast of Myanmar.