I earned Interest income from savings bank and fixed deposit accounts in India. Tax was withheld at source for this. I entered this amount in Box 4 of 1099. Correct?

If it was US Federal tax withheld, the answer is Yes.  If it was foreign tax (India) it would be entered in Box 6.

If I make this change, it says that I now owe more tax to the US government. But this doesn't make sense; I've already paid this tax in another country. Why am I being taxed again?

That is correct.  It will be taxed again, but you can claim a foreign tax credit.  

I believe I had a credit last year as well. I had a number in Form 1116 - Line 30 for 2017. Does this matter? How do I handle this?