New guidelines, outlined on Friday, update the country's designated red, green and orange zoning system.
Red zones are considered hotspots, while considerable relaxations will be permitted in areas considered less dangerous.
India has been under lockdown measures since 24 March, with more than 35,000 cases confirmed nationally.
A new home ministry statement, outlining the extension until 18 May, said there had been "significant gains in the Covid-19 situation".
But Friday saw a record number of new cases added to the nation's official tally.
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Source: BBC
