India is planning a 4.5 billion rupee (£52m) mission to Mars next year.
Prime Minister Manmohan Singh said the unmanned probe would enter orbit around the planet and collect scientific information. He announced the mission during a speech marking the 65th anniversary of India's independence from British rule.
"This spaceship to Mars will be a huge step for us in the area of science and technology," he said.
The spacecraft is to be launched in November next year on a frequently used rocket developed by the Indian Space Research Organisation.
India has had an active space programme since the 1960s. Since the 1970s it has launched scores of satellites for itself and for nearly two dozen other countries.
In 2008, India successfully sent a probe to the Moon that detected evidence of water on the lunar surface for the first time. India is also planning a rover mission to the Moon and is awaiting budgetary approval for a manned space mission.
Critics of Singh's Congress party say the government's priorities are wrong and it should concentrate instead on providing the basic needs of people such as electricity and safe drinking water. Last week, more than 600 million people lost power for hours when the country's decrepit electricity grid collapsed.
Indian scientists dismiss the criticism, saying that technology developed as part of the space programme has resulted in spin-offs in other areas.