Two-dimensional flexural backstripping and thermal modelling (assuming laterally variable stretching) is applied along regional depth-converted interpreted seismic profiles from the Laxmi Basin in the Arabian Sea. Results from reverse post-rift flexural modelling reveal considerable basin-wide subsidence in response to the crustal geodynamics during and after the last extensional phase. Unloading of the stratigraphy allows us to estimate the degree of laterally varying extension, assuming thermal subsidence and pure shear. High degrees of extension in the basin centre predict considerable water depths at the time of rift cessation, consistent with deep drilling data. We suggest that regional extension prior to Paleocene time could have fuelled variable subsidence in the Laxmi Basin but that extension is less than seen in typical oceanic lithosphere. Volcanic loading by the seamounts shortly after extension has flexed the basin and implies an effective elastic thickness (Te) at that time of ∼6 km. Reconstruction of the seamount top near sea level at the end of emplacement indicates no major transient uplift potentially linked to the Deccan mantle plume activity. Backstripping of post-rift sediments from interpreted seismic profiles supports the presence of a hyper-thinned crust underneath the Laxmi Basin, with β factors reaching >7 in the basin centre and ∼3 across much of the basin width. Computations of decompacted sediment accumulation rates in light of new results from IODP Expedition 355 show that basin sedimentation peaked during early–middle Miocene time, possibly coeval with uplift and erosion of the Himalayan–Tibetan Plateau driven by strong summer monsoon rains.