My two cents: 'The Tiger's Wife' by Téa Obreht isn't set in India, but its Balkan folklore-infused magic realism has a very similar feel to Roy or Rushdie. If you love that style, you'll likely enjoy this too. The grandfather's story about the deathless man is just incredible storytelling.
Finally, the most essential modern Indian fiction book is the one you actually finish. The one that doesn't feel like homework. The one you stay up late reading, the one you force your friends to read, the one you see the world through for days after you've turned the last page. That book will be different for everyone. So take these lists as a map, but let your own curiosity be the compass.