The decision was taken at a Cabinet meeting chaired by Prime Minister Narendra Modi.
Briefing reporters here after the meeting, External Affairs Minister Sushma Swaraj said the Surrogacy Bill will prove to be a milestone towards women's empowerment.
"The bill on surrogacy was awaited for a long time. It was approved by the Cabinet today," Sushma Swaraj said.
"This Bill will prohibit commercial surrogacy and allow ethical surrogacy to needy infertile couples," the Minister said.
Sushma Swaraj also said that for using surrogacy the couple must be a legally married couple and also require to produce "unfit medical certificate" to prove that there is some complexity in any one of the partners.
"The altruistic surrogacy will not be allowed to single parents, live-in partners and homosexual couples," she added.
"The married couple can get permission only if their marriage is at least five years old," she added.
She also said that altruistic surrogacy will only be allowed for Indian citizens and not to NRIs (Non-Resident Indians) or OCI (Overseas Citizen of India) card holders.
The Minister further said that couples having kids or having adopted a child cannot use surrogacy.
The Minister also took a dig at Bollywood celebrities for using surrogacy despite having kids.
"This is not a thing for joy. These days there is a trend that a few people, who already have kids, boy and daughter, try to get another kid through surrogacy as they don't want to put their wives in pain," she added.
