The coastal waters of India undergo dynamic changes in their light absorption characteristics, influenced by a complex interplay of factors. In the northern Indian Ocean, characterized by two arms, namely the Arabian Sea (AS) and the Bay of Bengal (BOB), distinct bio-optical differences occur. The AS, experiencing less river influence and higher productivity, contrasts with the BOB, where substantial freshwater influx from river discharges significantly impacts light attenuation. This influx reduces light absorption by optically significant substances (OSS or OAS) like phytoplankton, detritus, and colored dissolved organic matter (CDOM), particularly in deeper waters. Additionally, the BOB coastal waters are further shaped by eddies and recurrent cyclonic storms, adding variability to OSS light attenuation properties. The study delves into the spatiotemporal variability of bio-optical constituents, aiming to understand the physical factors influencing light absorption by phytoplankton and related components across the coastal Indian Ocean. Notably, the investigation validates and develops algorithms specific to this region, highlighting differences in bio-optical properties between the AS and BOB. For instance, the specific absorption due to phytoplankton enables clear differentiation of phytoplankton size classes (PSCs) in coastal regions. Furthermore, CDOM absorption properties exhibit molecular weight, aromaticity, and conservative and non-conservative behaviors. These serve as tracers for identifying various sources of dissolved organic matter (DOM) in the coastal zone. During cyclonic and non-cyclonic events, the apparent optical properties of OSS exhibit significant variability, further emphasizing the complexity of coastal dynamics. Understanding OSS light absorption properties not only aids in estimating carbon levels but also contributes to comprehending the optical coherence resulting from physical processes in the AS and the diverse coastal BOB. This research sheds light on the intricate relationship between freshwater stratification, environmental dynamics, and bio-optical constituents, elucidating the optical properties of coastal waters in the region. This review also presents the recent advances made in the regionally tuned remote sensing algorithms for real-time monitoring, helping with objectives like biological resource mapping, algal bloom, including harmful algal bloom warnings and marine pollution episodes.