"Mother Teresa was an Indian citizen and she is resting in her own country, her own land," Foreign Ministry spokesman Vishnu Prakash said.
A spokeswoman for the nun's Missionaries of Charity described the Albanian request as "absurd".
Mother Teresa, an ethnic Albanian, was born in Skopje, now part of Macedonia.
Correspondents say that the row over her resting place could develop into an ugly three-way squabble between India, where she worked most of her life, Albania where her parents came from and Macedonia where she lived the first 18 years of her life.
Albanian Prime Minister Sali Berisha said his country will continue the quest to regain Mother Teresa's remains before the 100th anniversary of her birth next year. Link -via Arbroath