Kerala's Alappuzha Medical College was granted permission to carry out tests for the new coronavirus that has infected three people in the state and killed hundreds in China, where it was first detected.
Until now, samples were being sent to the National Institute of Virology in Pune, Maharashtra.
Tests in Alappuzha will be headed by a senior doctor, Sugunan, and the state government hopes they will reduce delays.
A cousin of the virus causing SARS, the Novel Coronavirus 2019 (2019-nCoV) has infected well over 17,000 people across multiple continents and killed 361 people, all but one of whom died in China.
The World Health Organisation has declared the epidemic a Public Health Emergency of International Concern.
India has evacuated hundreds of its citizens from is China's Wuhan city, the epicentre of the outbreak of 2019-nCoV.
All three coronavirus cases reported in India were detected in Kerala.