The 61-year-old Italian-born Gandhi, widow of former Prime Minister Rajiv Gandhi, was admitted to New Delhi's Sir Ganga Ram Hospital, where her condition was described as stable and showing "steady improvement," the Press Trust of India reported.
"Her condition is stable and she had normal meals and rest," said a late-night hospital statement.
Gandhi was taken to the hospital early Tuesday morning after she complained of having trouble breathing, the report said. Her condition was diagnosed as a chest infection.
PTI quoted sources in her party as saying she was expected to be released Wednesday.
The report said Gandhi's two children Rahul and Priyanka, who were in the Maldives to celebrate the New Year, returned to New Delhi to be with their mother.
Security was tight around the hospital and no visitors were allowed, the report said.
Celebrity Families of 2014 [PHOTOS]