Heavy rains triggered the disaster in the Himalayan state of Arunachal Pradesh, which lies on the Tibetan border and is claimed in part by China.
The workers, who were building a hotel, were asleep when the landslide hit their camp in Tawang district, more than 10,000 feet (around 3,000 metres) above sea level.
"Sixteen bodies have been recovered by police and emergency workers. One more is feared trapped under the debris," said Anto Alphonse, superintendent of police for Tawang.
"Three labourers survived and have received minor injuries. A total of 20 workers were at the spot when the massive landslide struck the construction site."
India's National Disaster Management Authority said police and soldiers had rushed to the scene.
Landslides are common in the Himalayas, particularly during monsoon season, which begins in June.
In a tweet Prime Minister Narendra Modi expressed "grief on the loss of lives" in the disaster.
Days of incessant rains have caused flood-like situations in many parts of the frontier state, triggering flash floods and landslides.
Local media reported heavy damage to houses, road infrastructure and crops, as all the major rivers in the state are running over the danger mark.
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