The vaccine has also received approval for human testing in Canada. The latest company to announce a vaccine candidate is Bharat Biotech. These trials are meant to demonstrate safety and immune responses.
Vaccine developers have also been asked to provide data to support use of their vaccines during pregnancy and to show safety and effectiveness in children, the agency said. Half a dozen Indian firms are developing vaccines.
This is the first India-made vaccine and developed from a strain of the virus that was isolated locally and weakened under laboratory conditions.
The Drug Controller General of India has approved the company's application to conduct a Phase I and II clinical trial of Covaxin, which was developed along with the Indian Council of Medical Research's National Institute of Virology, the company said in a statement on Monday.
Flu vaccines are 30%-70% effective in any given year, according to Jefferies analyst Michael Yee. The formula was developed by a combined military research unit and the biotech firm, the company said Monday.
A vaccine would see potential profits for the medical and science industry, makers of medicine and researchers. The company - which produces vaccines for H1N1 influenza, rotavirus, Japanese encephalitis and rabies - has delivered more than four billion doses of vaccines across the world.
Dr Krishna Ella, Chairman and Managing Director of Bharat Biotech, said, "The collaboration with ICMR and NIV was instrumental in the development of this vaccine".
About a third of Americans said in a recent Reuters/Ipsos poll that they would be less inclined to receive a coronavirus vaccine if President Trump said it was safe.
India, a leading manufacturer of vaccines and generic medicines, is expected to play a key role in this race, with several institutes working on different drugs.
According to the World Health Organisation (WHO), there are 16 vaccine candidates now in late-stage clinical trials among the 140 vaccines in different stages of development to fight COVID-19.
That would be a huge scientific feat and there are no guarantees it will work, correspondents say.
Typically, it might take as long as 10 years to make a vaccine, test it, and get it approved by regulators like the FDA.