The successful test marks a significant step in India's bid to build a fully operation missile shield for key areas and installations in its terrain.
India's Defense Research and Development Organization said that a Prithvi interceptor missile managed to knock down a hostile missile at an altitude of about 9 miles. DRDO is developing the missile defense program.
The test, the fifth of the two-tier system, validated what The Hindu newspaper reported as "the endo-atmospheric layer of interception, when the ... (missile) achieved a kill of the Prithvi during the latter's terminal phase."
The launch was staged from Whealer Island off the coast of Orissa, 45 miles across the sea from Chandipur, over the Bay of Bengal where the previous hypersonic missile, veered off course and officials lost sight of it on monitoring radars, last March.
At the time, the missile deviated from its trajectory after traveling for about 20 seconds, failing to reach the required altitude of 68.3 miles. It instead reached about 43 miles before plunging into the Bay of Bengal.
An urgent investigation was launched to determine the cause of the subsystem failure and a new testing date was quickly assigned.
DRDO scientists have since then denied failure in the system, blaming instead its original Israeli-built Green Pine radar which was replaced with an indigenous system.
A DRDO scientist speaking to The Hindu, daily, said he expected the system to be operational in 2012 and the second phase four years later.
Should India succeed with its defense shield designs it will join Israel, Russia and the United States in both developing and owning such defense technology.
Although manufactured domestically, the system's tracking and fire control radars have been developed with Israel and France.
A follow-up interceptor test is said to be conducted in the endo-atmosphere in three months.
Air Marshal P.K. Barbora, said this week's mission proved that the nation was at the doorstep of having a full-fledged defense shield umbrella, "which is required considering the environment," The Hindu reported. He didn't elaborate.
Military officials say testing goals aim to obtain a kill probability of 99.8 percent by first intercepting enemy missiles outside the atmosphere and then tracking and destroying the so-called leakers, inside.
Bent on bolstering its military might, India announced plans recently to spend up to $30 billion on its military by 2012.
In recent months, for example, it inducted a long-range nuclear-tipped missile into its armed forces, unveiling, also, a defense spending budget spiked by 24 percent since last year.
The moves have Pakistan fretting, with leading officials billing India's drive a "massive militarization."