The 710-bed institute will come up up in the Jhajjar (Haryana) campus of the All India Institute of Medical Sciences (AIIMS).
To be located in Badhsa village in Jhajjar, the NCI is estimated to be completed in 45 months at a cost Rs.2,035 crore.
An official release said the decision to set up the NCI was "a landmark step in the arena of cancer research in the country" and will lessen the deficit of tertiary cancer care in the northern region.
"Cancer is emerging as a major public health concern in India, where every year 11 lakh new cases are diagnosed, with a mortality rate of 5.5 lakh per year," the release said.
It said there has been a lack of cancer treatment facilities in India, compared to WHO standards, which require one radiotherapy machine per million population. India, at present, has 0.41 machines per million population.
"The setting up of this institute will herald a new chapter in the government initiative against cancer," the release said, adding the institute will operate on the lines of US' NCI and the German Cancer Research Centre, as a nodal centre for indigenous research.
The institute will plan, conduct and coordinate research on cancers which are more specific to India such as those related to tobacco use and those afflicting organs like the uterus, cervix, gall bladder and liver.
"The focus will be on understanding, analyzing the cause and genesis of the above cancers. This will further translate the knowledge gained to develop feasible strategies to improve cancer care services by improvement in detection, diagnosis, treatment and quality of life of patients," the release said.
The proposed institute will have clinical division, research divisions, and disease management groups (DMGs), which will go into the details of all issues pertaining to management of various cancers.
The NCI will have 710 beds with facilities such as surgical oncology, radiation oncology, medical oncology, anesthesia, palliative care and nuclear medicine etc.
It will have a tissue repository, which will be the first of its kind in India.
The HSCC (India) Ltd., a public sector enterprise under the administrative control of the health and family welfare ministry, has been appointed as project consultant by AIIMS.