The federal cabinet approved the quotas Thursday within an existing 27 percent quota for Other Backward Classes, CNN reported.
The move will allow economically and socially disadvantaged minorities, such as Muslims, Sikhs, Christians, Buddhists and Zoroastrians, to be included in affirmative action programs.
The decision will benefit Muslims most since they make up the largest minority community in those designated backward.
The quotas were seen as a move by the country's Congress to win support from Muslims in Uttar Pradesh, India's largest state. Muslims comprise about 18 percent of the state's 200 million residents.