Madhya Pradesh Government spokesperson Narottam Mishra said the state cabinet approved the proposal to develop the solar power station in Gurh region.
The project, which is expected to cost about INR45bn ($712m), is planned to be developed in three phases of 250MW each.
A joint venture company has been set up by the centre and the state governments to commission the project.
The transmission line of the project will be laid by state-owned Power Grid Corporation of India. Madhya Pradesh Power Management Company will transfer 40% of energy generated from the facility to the state government, which is seeking loan from World Bank.
Earlier in 2015, Madhya Pradesh New and Renewable Energy additional chief secretary Mohanty told Times of India: "No clearance from pollution control board is required for the project. We have to sign a joint venture agreement between state-run PSU Urja Vikas Nigam and Solar Energy Corporation of India and a detailed project report will be prepared.
"Preliminary reports are already prepared and we will complete formalities by April and we will be in a position to invite tenders."
