The Pioneer newspaper, in a delayed report, said the incident occurred last month in the desert state of Rajasthan, where caste-based discrimination is still very common.
A non-governmental organization said the "untouchable" students were punished by the authorities of a government-run school in the Rajasthan district of Barmer for demanding the right to drink water from an earthen pot kept in the school.
The Pioneer said only upper-caste Hindu students were allowed to drink water from the pot in Barmer, where searing summer temperatures are among the highest in India.
It said the students' "feeble protest" was followed by strong action.
"They couldn't attend school for four days after their expulsion on August 16, and they were re-admitted to the school only after a non-governmental organization working in the area threatened to take up the case with higher authorities."
The expulsion occurred around the time of India's Independence Day on August 15, which marks the end of British colonial rule over the sprawling sub-continent. One of the main objectives of independent India was the eradication of caste-based discrimination.
Under the traditional Hindu social system, the shadow or the touch of lower-caste "untouchables" was considered unholy and dirty, and they were barred from sharing water or food with those higher up the social ladder.
An activist from Unnati (Progress), the NGO which fought for the rights of the lower-caste schoolchildren, told the Pioneer that an inquiry into the incident proved that "upper-caste teachers, including the principal in the school, were discriminating against 'Dalit' [oppressed, or lower caste] students."
The newspaper said there had been no punitive action so far.
The Unnati activist said the "untouchable" students were still finding the going tough.
"They are left at the mercy of the upper-caste students. To quench their thirst, they must appease their upper-caste friends."