India's financial crime agency arrested Arvind Kejriwal, the chief minister of Delhi on Thursday, in connection with graft allegations relating to the city's liquor policy, his party said, a setback for the opposition ahead of elections.

The arrest means the main leaders of the decade-old Aam Aadmi Party (AAP) are in jail, following the arrests last year of two of Kejriwal's deputies in the same case - which the party has called "dirty politics".

The agency, the Enforcement Directorate (ED), is investigating allegations that a liquor policy implemented by the Delhi government in 2022, which ended its control over sale of liquor in the capital, gave undue advantages to private retailers. The policy was subsequently withdrawn.

Atishi, an AAP lawmaker from Delhi, said on social media that the party was seeking to quash the latest arrest.

"We have asked for an urgent hearing by the Supreme Court tonight itself," she said.