Can someone in India sue me in the United States (California)? Their claim is that my company owes them money which is not true as most of the money was paid less penalties charged by my clients for late shipping and quality issues of product?

The fact that you may have defenses does not mean you cannot be sued. If you are a corporation or an LLC you will need a lawyer to file an answer (and perhaps bring a cross-complaint) in court since an LLC or corporation cannot appear "alone' or though a corporate officer or director.