India's space agency has said it will launch its first manned mission to space in 2016.
A senior official of the Indian Space Research Organisation (Isro) in Bangalore said that two astronauts would take part.
"We are preparing for the manned space flight," Isro Chairman K Radhakrishnan told reporters.
"We will design and develop the space module for the manned mission in the next four years," he said.
Observers say India is emerging as a major player in the multi-billion dollar space market.
In September it launched seven satellites in a single mission, nearly a month after the country's inaugural Moon mission was aborted.
Isro says that it will soon shortlist two astronauts to train for the space flight.
The manned mission will cost 124 billion rupees ($2,676,740,597).
Delhi has given its approval for the mission, space officials told the BBC.
India's space agency is also setting up a full-fledged training facility in Bangalore to train the astronauts.
The country's first unmanned Moon mission, Chandrayaan, was launched last year.
The second unmanned project, Chandrayaan-II, will be launched in the first quarter of 2013 - a prelude to the manned space mission.
India's first Moon mission had to be terminated because of a failure of critical communication components, but Isro officials termed the mission a success because 95% of the scientific objectives were completed.
India also plans a mission to Mars in 2030.