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Background Pongamia is considered an important biofuel species worldwide. Drought stress in the early growth stages of Pongamia influences negatively on the germination and seedling development. Due to lack of cultivar stability under drought stress conditions, establishment of successful plantation in drought hit areas becomes a major problem. To address this issue, drought stress response of four Pongamia genotypes was studied at morphological, physio-chemical and transcriptome levels. Methods and results Drought stress was levied by limiting water for 15 days on three months old seedlings of four genotypes. A significant effect of water stress was observed on the traits considered. The genotype NRCP25 exhibited superior morpho-physiological, biochemical drought responses. Also, the genotype had higher root length, photosynthetic pigments, higher antioxidant enzymes and solute accumulation compared to other genotypes. In addition, transcript profiling of selected drought responsive candidate genes such as trehalose phosphate synthase 1 (TPS1), abscisic acid responsive elements-binding protein 2 (ABF2-2), heat shock protein 17 (HSP 17 kDa), tonoplast intrinsic protein 1 (TIP 1–2), zinc finger homeodomain protein 2 (ZFP 2), and xyloglucan endotransglucolase 13 (XET 13) showed only up-regulation in NRCP25. Further, the transcriptome responses are in line with key physio-chemical responses exhibited by NRCP25 for drought tolerance. Conclusions As of now, there are no systematic studies on Pongamia drought stress tolerance; therefore this study offers a comprehensive understanding of whole plant drought stress responsiveness of Pongamia. Moreover, the results support important putative trait indices with potential candidate genes for drought tolerance improvement of Pongamia.