Hundreds of mourners attended the funeral of Nitin Garg near his family's home in Jagraon, near Ludhiana in the state of Punjab in India's north, the ABC reports.
Family members and mourners led a procession to a cremation ground in an emotional ceremony.
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A representative from Australia's High Commission attended the funeral.
Mr Garg's family announced a reward of $US10,000 for informational to catch his killers.
Authorities in India have urged media to show restraint in reporting attacks on Indian students in Australia.
The 21-year-old was stabbed to death in Footscray more than a week ago.
Victorian police are investigating the murder.
Indian media 'unlikely to heed calls for restraint'
Today the federal government said the Indian media is unlikely to show restraint when reporting on alleged racism in Australia.
India's foreign ministry has called on its media to exercise restraint when reporting on recent attacks on Indians in Australia.
The call follows media reports that suggest the stabbing death of Nitin Garg in Melbourne on January 2 and Saturday's attack on Jaspreet Singh, who suffered burns after being allegedly set alight, were racially motivated.
Mr Crean says it's too early to conclude that the crimes were racially motivated. "We are dealing with sensitive issues here, but the fact is ... there is no evidence that they're racially based (attacks)," he told the ABC.
"It is far better to ... wait for the full facts, we would urge the Indian newspapers to do that.
"But I think that will fall on deaf ears in a number of cases because we are used to that," he said in relation to the media reports that followed several attacks on Indian nationals and students last year.
Meanwhile, a 29-year-old Indian man was in hospital with burns after being set alight in Essendon in Melbourne over the weekend.
