When the tanker, now carrying the name "Oriental Nicety," entered Indian waters in May India's Supreme court had said it would not be allowed in until it was decontaminated, the BBC reported.
The court has now ruled the Gujarat Maritime Board and the Atomic Regulatory Board have certified the ship contains no hazardous material.
However, the court said, "if any toxic wastes embedded in the ship structure are discovered during its dismantling," the ship owner must pay for their disposal.
The Exxon Valdez was bought recently by the Hong Kong-based subsidiary of an Indian ship-breaking firm.
The Exxon Valdez caused a widespread ecological catastrophe when it ran aground in Alaska in 1989, spilling 11million gallons of crude oil that contaminated more than a thousand miles of coastline and killed tens of thousands of seabirds, otters and seals.