The government issued a notice Tuesday saying the ban on employing children would come into effect Oct. 10.
Tuesday's order also prohibits the employment of children in spas, motels, tourist resorts or other recreational centers, the Labor Ministry said in a statement.
The government had earlier banned government officials from employing children to work as domestic servants.
According to government figures, there are nearly 13 million child workers in India, the AP reports.
A Labor Ministry committee that reported on child workers in India said it recommended the ban because children were often subjected to physical violence, mental trauma and sexual abuse.
Violators could face up to two years imprisonment, a fine up to US$ 425 or both.
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