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Academic stress is a critical aspect of adolescent experience around the world, but particularly in countries with dense populations that lead to highly competitive college admissions. With a population of over one billion people, the competition for higher education in India is significantly high. Although research has shown that academic pressures are associated with anxiety in adolescents, this work is primarily cross‐sectional. The current study examined academic stress and anxiety symptoms over time and assessed physiological hyperarousal as a mediator and social acceptance as a moderator of this relation in a sample of adolescents from India (N = 282, 13–18 years, 84% female). Adolescents completed measures of academic stress, physiological hyperarousal, social acceptance and anxiety symptoms at two‐time points, 5 months apart. Findings demonstrate direct effects of academic stress on changes in symptoms of generalised anxiety and panic, as well as indirect effects through physiological hyperarousal. Social acceptance did not moderate the relation, although it uniquely predicted changes in panic disorder symptoms over time. The findings of this study contribute to the scientific understanding of a potential mechanism through which academic stress leads to anxiety among adolescents in India. [ABSTRACT FROM AUTHOR]