Space scientists and senior officials of the state-run ISRO are preparing a pre-project report to build the infrastructure and facilities for the mission, estimated to cost a $2.76 billion.
ISRO chairman K. Radhakrishnan said the agency would develop the space module for the program within four years.
We are planning a human space flight in 2016, with two astronauts who will spend seven days in the Earth's lower orbit, Radhakrishnan told reporters at ISRO headquarters in Bangalore.
The government had allocated $10 million for pre-project initiatives in 2007-08.
The space agency will also establish a facility in Bangalore for training the astronauts and build a third launch pad at its spaceport in the southern state of Andhra Pradesh.
Spacecraft for the proposed manned mission will have extra facilities like entry into crew capsule and an escape chute, the chairman said.
In September, India's Chandrayaan-1 satellite discovered water on the moon, boosting India's credibility among established space-faring nations.
If successful, its bid to put a man in space will follow the United States, Russia, and China