Pence's move on Tuesday to quell a backlash over the law came as Arkansas lawmakers defied criticism and passed similar legislation that now heads to the governor. A look at the latest developments:
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What the laws say
The Indiana law, which takes effect July 1, does not specifically mention gays and lesbians, but opponents say it is designed to protect businesses and individuals who do not want to serve gays and lesbians, such as florists or caterers who might be hired for a same-sex wedding.
The law prohibits state laws that "substantially burden" a person's ability to follow his or her religious beliefs unless the government can show that it has a compelling interest and that the action is the least restrictive means of achieving it. The definition of "person" includes religious institutions, businesses and associations.
Critics say that language is broader than a 1993 federal law signed by then-President Bill Clinton that Pence says it's based on.
Twenty states now have similar laws in place.
Indiana University law professor Deborah Widiss said such laws across the country have not "been a sort of blank check to discriminate."
Widiss said the proposals are fueled by rulings legalizing gay marriage and by last year's Supreme Court interpretation of the federal law in a case involving retailer Hobby Lobby. The court ruled the retailer and other closely held private businesses with religious objections could opt out of providing the free contraceptive coverage required by President Barack Obama's health care law, the Affordable Care Act.