He said the Telangana Police "pro-actively share" information on anti-terror operations with other states and such "baseless charges demoralise" the forces.
"Shocked by allegations of Sh Digvijay Singh on #Telangana police encouraging Muslims to join ISIS. He should present evidence or apologise," Mr Naidu said in a tweet.
The Information and Broadcasting Minister was responding to Mr Singh's accusation that Telangana Police was radicalising Muslim youths and encouraging them to join the ISIS by setting up a "bogus" website of the terror group.
The senior Congress leader had also asked Telangana Chief Minister K Chandrasekhar Rao whether he had authorised the state police "to trap Muslim youths and encourage them to join the ISIS".
"If he has then shouldn't he own the responsibility and resign? If he hasn't then shouldn't he enquire and punish those who are responsible for committing such a heinous crime (sic)," Mr Singh said in a tweet.
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