They should also credibly investigate several recent incidents in which police allegedly abused transgender people, the US-based body said in a statement.
In April 2014, the Supreme Court ruled that transgender people should be recognized as a third gender and not only enjoy all fundamental rights but also receive special benefits in education and jobs.
"India's Supreme Court last year finally recognized the rights of transgender people to vote, to get education or to find a job," Human Rights Watch said.
"Now it's up to the authorities to enforce the ruling by prosecuting those that target transgender people, denying their right to live in dignity and without persecution."
Nearly a year after the Supreme Court's judgment, implementation has stalled, even as recent attacks on transgender communities highlight their vulnerability, Human Rights Watch said.
In particular, section 377 of the Indian penal code, which criminalizes same-sex relations among consenting adults, has made both transgender people and homosexuals vulnerable to police harassment, extortion and abuse, it said.