The government of Narendra Modi approved an emergency order, drawn up by the health ministry, that could see first-time offenders jailed for up to a year and fined 100,000 rupees (£1,100).
Speaking at a news conference in Delhi on Wednesday, finance minister Nirmala Sitharaman said the decision had been taken because e-cigarettes were becoming a growing health risk to India's youth.
Quoting unspecified reports, Ms Sitharaman said e-cigarettes appeared to be becoming a “style statement”.
“Reports say that there are some who are probably getting into the habit of e-cigarettes as it seems cool," she said.
A government committee first published a report recommending a ban on vaping in May this year, saying there was insufficient research into the health impacts of smoking e-cigarettes to guarantee it was safe.
Critics said the report did not take into consideration the relative health benefits of tar-less e-cigarettes compared to the smoking of traditional cigarettes.
There have been growing calls for bans on vaping worldwide following the deaths of at least six people in the US. In response, Public Health England issued a statement last week, saying that "vaping isn’t completely risk free, but is far less harmful than smoking tobacco".
Vaping is already banned across much of India, with 16 states having already passed laws against e-cigarettes.
But an industry association accused the government of dressing up an economic decision as a matter of public health. Ahead of today's ban, Samrat Choudhery, founder of Association of Vapers India, said: "The government owns 28 per cent of ITC, a leading manufacturer of cigarettes, which means it is directly profiteering from the cigarette trade, along with earning [millions] in taxes on cigarettes."
In her announcement today, Ms Sitharaman noted that "it is believed that there are more than 400 brands [on the market], none of which is manufactured yet in India".